Argentine utility Transener will meet investors in New York today after visiting accounts in Boston yesterday as it looks to market a new 2021 that is part of a debt exchange and buyback of its existing 2016s. The borrower is looking to pay a nominal annual rate of 9.75% on an up to $148.6m issue, with books on the trade open until July 25, according to a local regulatory filing. Investors can exchange the existing bonds for the new 2021s par for par, and receive an extra $30 for each $1,000 if tenders are submitted by the early bird date of July 25. Alternatively, they can cash in the existing bonds and receive $910 for each $1,000 in principal, plus another $90 in early bird premiums. The company is also seeking consents to amend terms and conditions on the outstanding bonds. The final size of the issue could be higher depending on the success of the liability management operation, but it cannot exceed the $300m ceiling set by the program. The exchange offer expires on August 9. The 2016s were originally issued in 2006 with a $220m size and priced at par to yield 8.875%. Citigroup and Deutsche Bank led that transaction and are also acting as leads on this occasion.
Category: Bonds
Venezuela to Issue up to $6bn in 2011
Venezuela is expected to issue an additional $5bn-$6bn in debt between Pdvsa and the Republic, according to a report by JPMorgan. “We would not expect a fundamental change in the overall policy framework that uses excessive USD issuance to locals to help prop up an overvalued FX rate until after the 2012 elections,” the bank says in the report. New bonds are expected to come wide by as much as 100bp. The 5.3 implied exchange rate requires the sovereign to issue relatively high-priced dollar bonds, though the finance ministry could potentially balk at the need for high coupons, according to the report. Pdvsa reopened $1.8bn of its 2013 bonds at the end of June, just weeks before paying the remaining $2.45bn maturity on its 2011s.
Cemex Seeks Ambitious Spread on Local ABS
Mexico’s Cemex is heard seeking ambitious spread levels on an up to MXP2.8bn ($213m) local asset-backed bond as it looks to refinance outstanding debt at a lower rate. Yet whether the cement company will achieve its pricing goals is still a matter for debate. Some investors are already heard drawing a starting line at TIIE+200bp if the borrower wants their participation in what is expected to be a 4 or 5-year bond backed by account receivables held by a trust. However, Cemex is heard sounding out accounts with a much tighter and audacious plus 80bp spread. Pricing is scheduled for August 4 and the bond will carry a similar structure to Cemex’s MXP2.2bn of asset-backed bonds due December 2011, which were priced at TIIE+250bp in 2009. Those bonds were also backed by a trust that held account receivables originated by Cemex Mexico and Cemex Concretos. “The company is exercising a call option in which it wants to refinance at a lower rate in an uncertain market,” says an investor who may opt out of this transaction but participated in 2009. “They want to rollover debt at a low rate at the expense of higher costs to investors.” The new bonds are expected to carry a local mxAAA rating. Proceeds are partly going to refinance the existing 2011s and for working capital. The Mexican cement company was last in the dollar market earlier this month with a $650m retap of its existing 9% 2018s through Citi, essentially helping it cover its financing needs for this year and next. IXE is the sole lead on the local transaction.
Conditions, Pricing Leave YPF Shelving Bond
Investors and YPF failed to reach a compromise on pricing Monday against an already uncertain backdrop, forcing the Argentine oil concern to abandon attempts to sell its new 8-year, 7-year average life bond, say buyside sources. It is thought the market’s idea of a new issue premium and disagreements over pricing against comp Argentine oil comp Pan American Energy were just too much to bear for a company that had its heart set on a marquee trade. Indeed, with no immediate financing needs, YPF can afford to wait for better conditions. “YPF wanted to price way inside Pan American and investors wanted similar levels to PAE,” says an investor. By last week, however, leads were heard arguing that a new YPF or PAE 7-year would trade in the secondary market at around 6.15%-6.25% and with a 50bp new issue premium, a primary offering could come at around mid to high 6s. However, with investors heard asking for high 6s to a 7% handle, leads had little room to maneuver on pricing should markets suddenly turn south on further volatility emanating from the US and Europe. “It was a wide enough margin where we knew there wasn’t going to be any progress,” adds an analyst following the company. Broader market unease over debt problems in the US and Europe certainly made life difficult for the Argentine borrower, which was in no rush to pay a volatility premium. In this environment, some investors were simply unwilling participate in what was a relatively small corporate transaction, despite the company’s blue chip status in Argentina. “It doesn’t make sense to invest in a corporate that would be considered less liquid than the sovereign,” adds a second investor. The sovereign’s New York law 2017s have been trading to yield 8.072%. The oil and gas concern was looking to raise $300m-$600m size via bookrunners BNP Paribas, Citi, Credit Suisse, ING, Itau, Santander and Standard Bank. YPF is rated Ba2/BB minus from Moody’s and Fitch.
AES Gener Launches Tender, New 2021
Chile’s AES Gener has launched a tender offer for its $400m in outstanding 7.5% 2014 USD bonds with the intention of also launching a new 2021. The electricity provider is offering 5.25% 2021s or cash to holders of the 2014s. Investors who opt for new bonds will receive $1,000 in 2021s plus $150 in cash per $1,000 principal of existing bonds if 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 will get $1,130 per $1,000, and have only until July 27. Gener also plans to sell new 2021s to the market, and is separately tendering for its local 8.0% 2019 bonds in a domestic offer. Fitch has put an up to $475m size on the new issue after rating it BBB minus last week. The offer is contingent upon a minimum $200m overall acceptance to the USD tender, as well as Gener successfully issuing enough new 2021s to the market to cover costs associated with the cash portion of the USD bond tender and the local bond ender. Citi and Deutsche Bank are acting as dealer managers.
Ampla Closes Debentures
Brazil’s Ampla Energia has completed a BRL300m ($188m) floating-rate and inflation-linked debenture sale. A BRL117m 2016 tranche was priced at the DI plus 1.2%, under the 1.4% ceiling. It amortizes in each of the final 2 years. A 2018 IPCA-linked piece pays a fixed rate of 7.9%, and amortizes in each of the final 3 years. Ampla, a Rio de Janeiro-based distributor, which is a subsidiary of Spain’s Endesa, plans to use the proceeds to refinance debt. Itau and Santander managed the rule 476 transaction, rated AA minus on a national scale.
Brazilian Metalworker Raises Debt
Brasmetal Waelzholz has completed the sale of BRL130m ($81m) of bonds in Brazil’s local market. The metalworker’s 2019 notes came at DI plus 3.0%, and amortize beginning in 2012. BW, as it is known, plans to use proceeds for capex and improving the capital structure of the business, according to a source at the company. Itau managed the rule 476 sale. BW was formed in 1973 from a joint venture of Grupo Souto Vidigal and Germany’s C.D. Walzholz. It supplies parts to the auto parts, appliances, hardware and several other industries.
Celulosa Argentina Postpones Dollar Bond
Celulosa Argentina has postponed its planned $150m 7-year NC4 after investors pushed back on yield guidance at 10%-10.25% area. “In the case that favorable conditions exist in the local and international markets in the near future, it is Celulosa’s intention to structure a new bond for up to $280m,” says the company in a filing with Argentina’s CNV. Investors had been asking for 11% plus to buy into the bond, but the pulp and paper producer cited regulatory constraints to pricing north of 10.25%. Celulosa’s difficulties came amid a tough week for LatAm issuers with Argentine blue-chip YPF also fighting to get satisfactory pricing and being forced to keep books open until this week. Citi and Credit Suisse were the leads. The credit is rated B2/B by Moody’s and Fitch.
Issuers Prep Bonds in Volatile Market
Close to $2.5bn in new LatAm bond supply is sitting in the immediate pipeline, but whether much of that sees the light of day will depend on events in the broader markets, say bankers. After a brief spurt of issuance earlier this month, activity was reduced to a trickle last week with just the Province of Buenos Aires raising $250m through a retap of its 2015s, but a failure to reach a consensus on pricing forced other borrowers to either extend deadlines or indefinitely postpone deals. Worries over European and US debt problems are threatening to close windows as the buyside seeks extra premiums to compensate for increased risks. More bad news from the US and Europe this week could spoil the fun for LatAm issuers preparing to issue. These include Argentine oil company YPF, Guatemala’s Banco Industrial, oil services credit Quieroz Galvao, sugar and ethanol concern Usina Vista Alegre and the Dominican Republic. This comes as several companies carry out liability management operations involving the issuance of new bonds. Chile’s AES Gener, for instance, is looking to sell a new 2021 as part of its exchange and tender, while Argentine utility Transener wants to do the same. This doesn’t include new names that are also heard plotting bond sales such as Argentina’s Grupo ODS, which is thought to have mandated Credit Suisse for a $150m 2018. If market conditions stabilize YPF could be the first off the block with an up to $300m 8-year, 7-year average bond (Ba2/BB minus). The subscription period has now been extended to July 22. The Argentine blue-chip name wants to push out a marquee trade, but it may have to show some flexibility on pricing versus comp Pan American Energy. “[YPF’s postponement] is a precautionary measure on the issuer’s part,” says one trader Friday. “Markets have stabilized post the Province of Buenos Aires tap so I would expect them to put out guidance Monday sometime, if they can overcome their pride to price flat to Pan American Energy.” On Friday PA
MRV Completes Local Bond Sale
Brazil’s MRV Engenharia has finalized the placement of BRL500m ($310m) in local bonds. The homebuilder’s 2016 were priced at the DI rate plus 1.5%, matching the ceiling it had set. The bonds amortizes in each of the final 2 years. MRV is raising funds to adjust its debt profile. Banco do Brasil managed the sale, done under rule 476. MRV is rated AA minus on a national scale.