Regional development bank Corporacion Andina de Fomento (CAF) plans to issue up to MXP 1.5bn ($128m) in 3-year and 10-year bonds through lead BBVA Bancomer. The 3-year floater is expected to price at a spread over TIIE with the 10-year at a fixed rate. CAF has a global A1/A +/ A+ rating from Moody’s, S&P and Fitch respectively. The MXP bonds have yet to receive a local rating. CAF last came to market in June when it retapped its 3.75% 2016s for another $500m. The MXP bonds have an August 19 issue date.
Category: Bonds
Posted inDaily Brief
CCR Heard Sounding Investors
Brazilian toll-road operator road operator Companhia de Concessoes Rodoviarias (CCR) has been sounding out the US buyside through Bank of America Merrill Lynch (BAML), say investors. For now, the Brazilian toll-road operator is simply heard to be engaging accounts but with no solid deal talk. However, if it were to issue USD bonds, such a deal would mark the borrower’s debut in the international bonds markets, though it is no stranger to local debenture transactions. In May, its subsidiary Concessionaria do Rodoanel Oeste sold BRL500m in 2014 bonds paying 109.2% of the DI, and BRL550m in 2015 bonds paying 111.0% of the DI. Bradesco and HSBC managed the sale, rated Aa2 on a national scale. In 2009, CCR also priced a follow-on equity offering through Itau BBA, with BTG Pactual and BAML coming in as joint leads.
Posted inDaily Brief
Cosipa Receives Consents to Amend 2016
Brazilian steel company Cosipa has received consents from holders of $140.747m of existing 8.25% 2016s, allowing it to amend the indenture governing the notes. The idea is to establish the same covenant package contained in the 7.25% 2018s issued by Usiminas, which merged with Cosipa in April 2009. The 2018s have less restrictive covenants thanks to Usiminas’ investment grade rating. Holders who validly delivered consents before the expiration date of July 27 will receive $2.50 for each $1,000 in principal. Itau BBA is acting as dealer manager.
Posted inDaily Brief
Brazilian Lender Readies FIDC
Banco Intermedium is preparing a BRL150m ($94m) FIDC transaction backed by credit receivables from government agencies for sale in the domestic market. The 4-year fund pays a spread to the DI that is to be defined during the bookbuilding process. The transaction has not yet been rated, and is expected to close in October. The FIDC will purchase receivables for credits originated by the social security institute INSS and other public entities. Itau is managing the sale.
Posted inDaily Brief
Helm Sets Local Bond Issue
Colombia’s Helm Bank has set an August 8 date for the sale of a COP200bn-COP300bn ($113m-$170m) domestic bond, according to local DCM bankers. The bank will choose from 6 available tranches based on the demand it sees. A 3-year note paying a spread to the interbank rate IBR, 5 and 7-year pieces paying a spread to the IPC, as well as fixed-rate tranches of 3, 5 and 7 years are all available. Generally, 2-3 tranches are the norm in Colombian local deals of this size. Helm is managing the sale itself, and is rated AA+ on a national scale. Issuance has been picking up recently in Colombia, if only for financial issuers. “A lot of liquidity has entered the market in the last 2-3 months,” says an analyst at a local shop, coming mostly from large coupon payments that the government has made on its local debt. Other financial issuers are looking to follow this month, including Banco Falabella (COP150bn) and Banco Finandina (COP60bn), Banco de Bogota and Banco Davivienda. Bancolombia sold COP800bn ($450m) in 5 series of new domestic bonds last week.
Posted inDaily Brief
La Polar Seeks Agreement to Avoid Bankruptcy
Chile’s La Polar plans to seek creditor approval of a judicial agreement to rework its debt and avoid bankruptcy, it says. The Chilean retailer needs the agreement to proceed with a planned CLP100bn capital increase after it set aside loan-loss provisions topping CLP500bn ($1.01bn) last month for consumer-lending losses and fired senior managers when irregularities were found at its consumer lending unit. La Polar’s board has agreed to file a preventative judicial agreement that requires support from creditors representing more than half the outstanding debt to be processed. Bondholders agreed June 20 on a waiver of covenants that allows the company to suspend pre-payments while stockholders approved on June 22 the sale of $200m in new shares.
Posted inDaily Brief
Safra to Test Global BRL Market
Banco Safra is looking to return to the BRL Global market for a second time in just over a month amid talk that the recent imposition of an IOF tax on derivatives may encourage investors to further migrate to the offshore curve and help spur more issuance of this type. This deal is coming directly from the Brazilian bank as opposed to Europe-based issuer that tapped the market in June with a BRL400m Reg S only 10% 2015 (BBB minus) that was priced at 99.627 to yield 10.125% via BAML and Safra, according to bankers. Banco Safra SA, rated Baa2 and BBB minus by Moody’s and Fitch, is splitting into two teams to market the 144A/RegS Global BRL trade amid expectations of a 5-year tenor. Today the borrower will be in London and Chile, where pension funds have shown interest in such bonds, and it will wrap roadshows on Tuesday in Los Angeles and New York. This comes after much talk that several Brazilian issuers are looking to replicate the success of McDonald’s franchise Arcos Dorados’ BRL400m 5-year global (Ba2/BBB minus) bond earlier this year. Brazilian banks such as Bradesco, Banco do Brasil and BNDES are all heard contemplating such structures as well as other corporates such as steelmaker Usiminas and perhaps utility Cemig, which recently completed non-deal roadshows with Deutsche Bank. Being a utility with revenues in BRL tied to inflation, Cemig is thought to be an ideal candidate for an inflation-linked BRL bond, much like Banco Votorantim did earlier this year. Yet despite bankers’ effort to pitch inflation-linkers, it is questionable whether this structure will truly take off this year. Still with both the euro and the USD under pressure, bankers think that investors are more willing to take on the currency risk embedded in plain vanilla Global BRL trades, though the Brazilian government’s efforts to contain the strength of the BRL could counterbalance this trend however briefly. More likely, however, the authorities’ attempts to control the upward trajectory of
Posted inDaily Brief
AES Gener Prints New 2021
Chilean utility AES Gener priced a new 2021 Thursday as part of a debt exchange and tender for its outstanding 2014s. In all its sold $400m of the 10-year notes at 99.037 with a 5.25% coupon to yield 5.375% or 242bp over UST, coming at the tight end of 5.375%-5.50% guidance. Close to $300m of that took the form of new money, while the remainder is to be used in the exchange. As of July 27, the company had received tenders to purchase $151.07m of 7.50% 2014s or 37.77% of the outstanding senior notes, while also receiving offers to exchange $100.20m of the notes for the new 2021. At the same in a separate local transaction, the company received tenders to purchase $93.8m of Chilean 8% notes due 2019 or about 48% of the outstanding bonds. Investors who opted for new bonds will receive $1,000 in 2021s plus $150 in cash per $1,000 principal of existing bonds if they had tendered prior to July 27. Thereafter, they will receive new bonds plus $110 in cash as long as they tender before the final deadline of August 10. Holders choosing cash got $1,130 per $1,000, and only had until July 27. Citi and Deutsche Bank are acting as dealer managers.
Posted inDaily Brief
Brazil’s Derivative IOF Could Encourage Global BRL
Neither bankers nor investors see the Brazilian government’s new IOF tax on derivatives diminishing the attractiveness of overseas issuance by the country’s companies. Indeed, the move may be another reason for accounts to migrate to the global BRL market as they look to avoid the increasingly onerous tax burdens being imposed onshore. “If the gap we’re seeing between offshore and onshore levels remains, it could make global BRL issuance more attractive [to investors],” says a New York based DCM banker. The new tax will likely make it cheaper for international buyers to hedge currency risk offshore, he adds. “This should drive more investors into global BRL,” adds another banker, noting a secondary rally in outstanding global-BRL bonds. “It will not change investing behavior fundamentally, but it will make things a bit more expensive for us,” says a North American EM debt portfolio manager. He explains that even if he hedges offshore, he expects it may still involve a counterparty using onshore hedging, and the cost is likely to be passed on. So far the impact of the new tax, which is part of the government’s effort to contain the strength of the BRL, has had a greater impact in the FX markets, where liquidity has already fallen and is expected to shrink further with Goldman Sachs downgrading the stock of BM&FBovespa on the expectations there will be fewer transactions. This could deter fast money, but the larger question for buy-and-hold types is the overall direction of government policy. “If investors see more and more controls coming, you will see a lot of interest move away from Brazil,” an EM bond investor says.
Posted inDaily Brief
Cemig Wraps Up Non-Deal Roadshow
Brazilian utility Cemig is wrapping up non-deal roadshows this week with Deutsche Bank after visiting international accounts. The borrower isn’t expected to tap anytime soon given it has no immediate funding needs, but it could try its luck later this year or perhaps in early 2012, says one banker. The utility is seen as a prime candidate for an inflation-linked BRL global issue much like Banco Votorantim did earlier this year. With revenues in reais and linked to inflation, utilities like Cemig are being targeted by banks pitching this idea. This comes amid much talk about more nominal global BRL deals on the horizon, with Banco Safra heard late Thursday announcing roadshows for such a trade through itself, JPMorgan and UBS.