Corporacion Geo has issued MXP400m ($34m) in 3-year floating rate bonds at TIIE+320bp, upsizing from an initial target size of MXP200m. Proceeds are for general corporate purposes. Fitch upgraded the homebuilder’s rating to BB minus from B plus with stable outlook earlier this month. BBVA Bancomer managed the deal.
Category: Bonds
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Inbursa Prices MXP Floater
Mexico’s Banco Inbursa has issued MXP4.9bn ($422.64m) in 3-year floating rate bonds, after receiving 1.1x demand, says a banker on the deal. The bonds priced at TIIE+20bp, flat to guidance and at the same levels achieved by Santander Mexico earlier this month when it reopened its MXP5bn 3-year bond for MXP730m. A non-participating investor says that while Banco Inbursa is a good credit with a AAA rating on a national scale, spreads were not attractive enough to warrant participation. Bankers on the deal say the book size was smaller because Inbursa had capped pricing at TIIE+23bp. Santander, BAML and Actinver were the leads. Banco Inbursa last came to the market in April, when it priced MXP4.5bn 3-year at TIIE+20bp.
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Peru Market Soars on Humala Appointments
Peru’s market soared almost 2% midday Thursday on news of several market-friendly appointments to the cabinet of President-elect Ollanta Humala, before closing slightly below its opening level. The appointments include Luis Castilla as minister of finance, Carlos Herrera as minister of mining, Salomon Lerner as chief of staff, and Kurt Burneo as minister of production. Several of the appointments had been anticipated, and cheered as proof that Humala was taking a centrist stance. According to Nomura, news will continue to support a rally in Peruvian assets, while the ratings agencies could upgrade the sovereign within the first three months of the new administration. Peru is rated BBB minus/Baa3.
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UVA Talks Double Digits
Brazilian sugar and ethanol producer Usina Vista Alegre (UVA) is out with preliminary guidance of 11% on a 7-year NC4, coming in-line with whispers heard earlier this week. Pricing could take place as soon as today. Size is expected to be between $150m-$200m on the 144A/Reg senior unsecured bond, which marks the issuer’s debut in the international capital markets. Double digits are seen as necessary to compensate investors buying into a credit that has a leverage ratio of 5.3x fueled by recent growth plans. Tight liquidity is also an issue. As of March 2011 the Sao Paulo-based company had BRL12.8m of cash versus BRL 124.5m in short-term debt, which will partly be paid down through proceeds from this offering, Fitch says. “Their problem is liquidity,” notes a London-based EM investor who has opted not to participate. Grupo Virgolino de Oliveira (GVO), a member of the Copersucar cooperative, is considered a direct comp to UVA. It came to market earlier this year with a $300m 7-year NC4 that was priced at par to yield 10.50%, the wide end of 10.25%-10.50% guidance. However, GVO is thought to have a stronger liquidity position than UVA and can count on Copersucar as a guaranteed buyer. UVA wrapped up roadshow in Los Angeles on Thursday. BTG Pactual is sole lead. Ratings are B minus/B3 by Fitch and Moody’s.
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Bco Industrial Puts Tier II to Bed
Guatemala’s Banco Industrial priced Wednesday a US$150m 10-year subordinated Tier 2 bond (Ba2/BB) at par to yield 8.25%, coming flat to earlier 8.25% area guidance and at the tight end of low-to-mid 8 whispers. Considered Guatemala’s largest bank, the sub investment grade credit had originally been seeking between $150m-$250m, but capped the deal at the lower end of that range as only $150m could qualify as Tier 2 capital. The bond jumped on the break to trade at 100.75-101.25. While difficult to comp to investment-grade Tier 2 bank issuers that have recently come to market, investors looked at the sovereign, with the deal coming at a quarter point concession to government paper, according to one participating investor. The 144/Reg S notes are secured by a subordinated loan from Bank of America to Banco Industrial, Fitch says. The US bank is transferring its rights to the loan to a trust, which in turn pledges the loan as collateral. Uses of proceeds are slated to repay subordinated debt and to strengthen regulatory capital. The notes are governed by New York law. Banco Industrial was brought to market by sole lead BAML. The issuer last came to market in 2008 when it priced a $30m 60-year NC10 priced at par to yield 9% through Credit Suisse.
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Camargo Correa Pair Reaches Majority in Tenders
Caue Finance and Loma Negra have reached 69.6% and 54.6% respective acceptance in tender offers for outstanding USD bonds. Holders of $104.5m in Caue’s 8.875% 2015 bonds and $54.6m of Loma Negra’s 7.25% of 2013 bonds had been accepted as of the July 19 early acceptance date. The companies are indirect subsidiaries of Brazilian conglomerate Camargo Correa. For each $1,000 in principal holders of the 2015s and 2013s got $1,750 and $1,070, which include a tender premium of $165m and $60 respectively. Early bird premiums on both come to $10. That will drop to $1,165 and $1,060 for the remainder of the offer period, expiring July 26. Caue Finance, an SPV, has also received sufficient consents to eliminate restrictive covenants, while holders of Loma Negra, a cement maker, will hold a meeting on July 26 to seek approval on amendments. BAML is acting as sole dealer manager.
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CAP to Spend $150m in 2036 Buyback
Holders of Chilean steelmaker CAP’s 2036 bonds have agreed to sell back $130m (65%) of the bonds in a tender offer, meaning it will spend $149m on the repurchase. CAP offered holders of the $200m in outstanding 7.375% 2036 bonds $1,117.33 per $1,000 principal in the offer expiring Tuesday. Citi was dealer manager. The 2036s were originally sold in 2006 through Citi and HSBC and priced at 99.761 to yield 7.395% or 250bp over. The BBB minus rated CAP recently extended a 3-year loan into a 5-year facility, upsizing to $200m from an original $150m.
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Elektra to Meet International Accounts
Mexican retailer Grupo Elektra is approaching international investors for the first time in over 10 years as it prepares investor meetings this week via BCP Securities with the intention of pricing a RegS 7-year NC4. The borrower will be in Switzerland and Miami on Friday and then next week it will be in New York, London, Singapore and Hong Kong between July 25 and 26. The company is part of Ricardo Salinas’s holdings, which include TV Azteca, Banco Azteca and Iusacell. Salinas has courted his fair share of controversy in recent years after being investigated by the SEC and de-listing Grupo Azteca in the US. The name therefore often raises red flags among investors. For instance, Salinas’s involvement in Mexican fertilizer Fertinal unnerved some accounts looking at its bond, which was eventually pulled. On the other hand, TV Azteca managed to sell a $300m RegS only 2018 bond earlier this year, upsizing it from $250m and pricing it at 98.669 with a 7.50% coupon to yield 7.75%. Like Grupo Elektra, TV Azteca’s issue marked the company’s first international deal in over a decade. Elektra itself last sold bonds abroad in 2000 when it issued a $275m 8-year NC4 at par to yield 12%. More recently, Elektra priced a MXN2bn local 3-year at TIIE+300bp in March.
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Pemex Keeps it Simple with $1bn Retap
Pemex reopened its outstanding 5.5% 2021 bonds Wednesday for another $1bn, locking in sub 5% pricing and its lowest ever yield along this part of the curve. Jumping through the window now meant the state-owned oil company could put most of its external financing needs behind it this year before heading into a blackout period. Whispers of high 190s were seen offering a 15bp-20bp concession to the underlying curve and generated sufficient interest to allow leads to build a $3bn book and upsize the trade from $750m to $1bn. In the end, the BBB/Baa1 credit came at 105.011 to yield 4.835%, or the tight end of 190bp-195bp guidance. “With current market conditions this deal is fair value,” notes a participating investor. Some accounts however simply saw the reopening as too expensive to draw their interest. “There are more attractive credits on a risk return basis,” notes a London EM investor who passed on the deal. “With Pemex coming in at around 80bp to Mexico on a spread basis we didn’t see this as too exciting,” says another investor. Buyers comprised Mexican, LatAm, US and even European accounts. The quasi-sovereign was brought to market by HSBC, Morgan Stanley and Santander. This comes as Pemex looks to tighten margins by another 50bp on an outstanding US$3bn plus dual-tranche loan.
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Venezuelan Supply Talk Gets Louder
Talk of an imminent Venezuela bond continued to swirl Wednesday, with RBS citing local rumors about an up to $4bn 12% 2031. The specific details associated with market chatter suggests that there may be some weight behind the rumors, though several shops including RBS say the sovereign is under no pressure to issue. If the sovereign were to issue a new 2031, RBS calculates that it will likely be priced at 101.00, but with a fair value yield to maturity and secondary level of 14.8% and 82.20, respectively. Such USD deals are typically sold at the official FX rate to locals who arbitrage against the weaker parallel rate by selling the bonds to foreigners at a steep discount. It is thought that the government will opt for a longer dated bond to smooth out debt maturities. Nomura, however, believes that the issuer may well be targeted at importers in need of dollar assets and could come in a single transaction. However, the shop has its doubts about an imminent issue partly because the Minister of Planning and Financing Jorge Giordani has expressed opposition to such issues. That said, Nomura expects more supply later in the year as the government seeks to replenish the Sitme, the state-run FX system.