Colombian oil giant Ecopetrol plans to issue up to COP1trn ($555m) in local bonds. A company spokesman says that terms have not been set yet and that banks have not been selected. However, Fitch has given the notes a local AAA rating. Ecopetrol has indicated it intends to invest about $80bn by 2020, including $6.9bn in 2010 alone. Fitch says the company has a strong liquidity position and that as of June, it had $3.4bn in cash on hand.
Category: Bonds
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CAF Deploys Loans to Panama, Argentina, Brazil
Multilateral bank CAF says it has approved loans for Brazilian electric company Eletrobras, Argentina’s railway system and Panama’s capital. Eletrobras will obtain a total of $500m in the form of an A/B loan. Of that amount, CAF will provide $125m, while the remaining $375m will be a syndicated loan from BBVA, Santander and HSBC. Argentina, meanwhile will get $326m, all from CAF, to improve railroad connections between the northern part of the country and the ports. Lastly, Panama’s capital city will get $120m from CAF to improve the sewage system. Terms for the loans are not disclosed.
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Codelco Gets Debt Nod
Shopping the DCM banks for bookrunners since August, Codelco has revealed its board approved in July the issuance of up to $1.8bn in debt at maturities up to 30 years. The state-owned copper producer is heard considering seriously a dollar bond, though the approval also contemplates domestic bonds and bank loans. Codelco says it did not reveal the authorization until Friday due to “pending negotiations with third parties.” Conditions for a dollar bond might prove too good to resist with UST still very low, the Chilean sovereign setting a $1bn 2020 benchmark in July to yield 3.890%, and Chilean banks and corporates being generally well-received this year. The A1/A miner is a popular though very infrequent issuer, having last sold $600m in 7.5% 2019s in January 2009 through HSBC and JPMorgan, to a $1.25bn order book. Citi, HSBC and JPMorgan, which led the Chile sovereign deal, are favored to run the copper producer’s bond.
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Edenor Launches Exchange
Argentina’s Edenor has launched a liability management exchange designed to term out maturity on its dollar bonds 5 years and lower its service costs, and also plans to sell additional new bonds. The electric distributor is offering cash or longer bonds to holders of its outstanding 10.5% of 2017 bonds in an offer expiring November 1. Holders can elect to receive new 9.75% of 2022 bonds, at rate of $1,030 principal per $1,000.00 tendered, plus a $70.90 cash bonus if done by October 15, or at $1,030 principal plus $50.90 cash if done after. The company is also offering holders a full cash payment of $1,060 per $1,000 principal if done by October 15, or $1,045 if done after. A new local and domestic offering of the 2022s is also set to take place towards the middle of the month, according to a banker on the deal. Edenor can issue up to $300m in the 2022 bonds through the exchange and the new sale. The new notes are rated B2/B minus internationally and A1 domestically. Deutsche Bank, JPMorgan and Standard Bank are managing the process. There are about $149m in the 2017s out in the market, according to a source with knowledge of the operation.
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GOL to Issue VRG Debentures
Brazilian low cost airline GOL says it plans to issue BRL600m ($355m) in non-convertible debentures of subsidiary VRG Linhas Aereas. The 2015 will pay 118% of the DI rate. GOL, rated BB minus/Ba3, says it will use proceeds to pay down a BRL378m balance from VRG’s debentures issued May 2009 and to pay suppliers. BB Banco de Investimento is the lead.
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JHSF Shareholders Approve Debenture Issue
Shareholders of Brazil-based real estate developer JHSF Participacoes has authorized the company to issue BRL270m ($160m) in non-convertible debentures. Proceeds will be used for working capital and to finance development of 3 shopping malls located in Sao Paulo, Bahia and Manaus, respectively, says investor relations spokesman Marcio Fenelon. The notes have not yet been rated. He adds that BNP Paribas will manage the sale.
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Neuquen Looks for Bond
Argentina’s Neuquen province is out with an RFP for a new bond, according to DCM bankers. The would-be issuer is expected to seek about $200m, perhaps using a similar ABS structure to the Chubut province. Pitches have gone out to a very wide group of banks, one of which says they are due this week. Chubut raised $150m in 2020 bonds in July at a 9.75% yield, through a securitization of oil and gas royalties. Neuquen’s last bond was a $125m 7-year oil royalty ABS in 2007, according to Dealogic.
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Afores Warm to Infrastructure, Despite Risk
Infrastructure may present an attractive opportunity for conservative investors like Afores, say Mexican market participants. “Risks are unavoidable in any business,” says Juan Antonio García-Gayou Facha, CFO at ICA Infraestructura. “The key is knowing how to mitigate them.” Indeed, risk mitigation is a chief concern among both investors and concessionaires. One potential solution championed by Miguel Martinez, director of project evaluation and financial structuring at IDEAL, is for infrastructure projects to be funded first by development, commercial and multilateral banks during the construction phase. Once project construction is complete, and potential stumbling blocks – such as environmental, social, and usage rights – have been surmounted, pension funds can participate in the operating phase. “The majority of our investors, about 66%, are pension funds,” says Nick O’Neil, COO of Macquarie Infrastructure’s Mexico fund. “Our clients have long-term liabilities” which dovetails nicely with the long-term, and often highly predictable, nature of infrastructure revenues, he adds. Sergio Méndez Centeno, Investment Director for Afore XXI, agrees. “We believe these are very important investments for us.” For Afores, infrastructure still represents a relatively new asset class. While participation in the sector has increased in recent years, investment levels remain far from ideal, according to Martinez. O’Neil says Macquarie mitigates risk for its investors by virtue of its structure as a fund, which aggregates multiple projects, reducing the likelihood of major losses. Macquarie has raised a MXP5bn fund to invest in the country’s upcoming projects, and opened a local office last year. However, the legal framework for project agreements, including matters such as minimum return guarantees, remain a area of particular concern for investors. “All players have to feel comfortable,” says Méndez, particularly when it comes to ensuring that capital costs and investment retur
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BBVA Continental Pays For Step Up
BBVA Continental boosted its Tier 1 capital with a $200m 2040 NC10 step-up issue. The Peruvian unit of the Spanish global bank drew about $1bn in orders, according to bankers on it. The deal landed at par with a 7.375% coupon to yield the tight end of 7.500% area guidance. After the 10-year no-call period, the bond pays a floating rate of Libor plus 680.2bp. The bond was heard up 2 points in the aftermarket Thursday, following talk in the market that it was coming cheap. Pricing falls between the roughly 7.0% yield of BCP’s hybrid step-up and the 7.5% level of Interbank’s hybrid, according to a New York-based EM investor looking at the deal, adding that a price comparison is tricky, as the secondary is not very liquid. Continental is expected to use proceeds for general corporate purposes and to strengthen its balance sheet. The bond makes use of a loan participation note structure to avoid a withholding tax. BBVA and Credit Suisse managed the sale, rated BB/BBB minus.
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BNDESPar Plans Fresh Debentures
BNDESPar has registered to sell BRL1.5bn in new debentures in up to 3 different tranches. It has yet to publish a full prospectus, so there are no details as to maturities or pricing. Itau is listed as a manager. The investment arm of the BNDES development bank is rated Aaa on a national scale. It would be its first bond sale since a BRL1.25bn deal in December 2009.