BR Properties could price a 9% perp NC5 as soon as today, according to a banker on the deal. One investor looking at the deal gives a range of plus or minus 12.5bp for the pricing. The issue is expected to come in around $200m to $250m, below earlier estimates by Fitch and Moody’s of a $300m issue. The bond is rated B+/Ba3. Proceeds will be used to acquire new properties and improve those in BR’s current portfolio, in addition to general corporate purposes. The banker on the deal described interest as positive, with solid participation from institutional investors. Credit Suisse and Itau are the leads. Traders note weakness in several recent perp issues, claiming that the market is saturated for that maturity.
Category: Bonds
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El Salvador Gets IDB Support
The IDB has approved a $200m loan to help strengthen El Salvador’s fiscal sector. The loan is part of a package of 6 operations approved by the IDB for El Salvador this year, totaling around $450m. The 20-year loan has been structured in 2 tranches, each with a grace period of 5 years, and an interest rate based on Libor.
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Fertinal Bond Hopes Fade
Fertinal was expected to have priced yesterday, according to a banker close to the deal, though other people tracking it say it was likely pulled. The $200m 2015 issue was rumored to have had trouble making book, and had originally been expected to launch by Tuesday. “It needs a stronger covenant package and guarantees on the first couple of coupons,” says an investor who passed. “It’s never been clear what [Ricardo] Salinas Pliego’s role was,” he adds. Salinas is said to own around 27% of Fertinal’s equity through holding companies, and the involvement is understood to have unnerved other potential participants. Another says that the pitch book was unclear, and that there were unexplained issues with the quality of the collateral. “Two months ago that deal would have sold overnight at that rate,” says a banker away from the deal. Proceeds of the B2 rated issue were to be used to repay a $180m bridge and partially finance capex and support working capital. The bridge is being used to reacquire assets from former creditors and satisfy other obligations associated with its bankruptcy, according to Moody’s. The fertilizer maker has a narrow product line, single site production capabilities and a limited operating history since restarting operations in 2007 after filing for bankruptcy, the agency says, noting a positive view on the agriculture sector and expectations of Fertinal’s improvement if it sticks to the business plan. Bankers at lead UBS did not return calls seeking comment.
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Fibria Talks Liability Management
Brazil’s Fibria is taking advantage of low interest rates in different product areas to meet de-leveraging goals. The pulp and paper producer has raised $1.75bn in the bond market and $1.9bn in the syndicated loan market in the past 12 months, and will continue to add to the mix as it pursues the debt improvement plan it started following its birth from the merger of VCP and Aracruz. “We won’t stop – we will always be challenging our creditors with different instruments,” Joao Elek, director of finance, investor relations and risk management tells LatinFinance. “If we can get a discount from one facility, we immediately start talking to the other lenders to reduce the costs of another,” the former executive at cable provider NET says. Fibria has cut the average costs of funds on dollar debt to about 6.0%, from 7.1% at the time of the merger, and aims to take that level lower. It has BRL10.8bn in net debt and BRL13.2bn total debt, with an average maturity of 5.8 years, he says. Elek declines to disclose any specific plans for its next borrowing, though he notes that the bond markets remain attractive. “The low interest rate environment should prevail for longer than was expected 2 years ago,” he says, though he notes it is important for issuers to take advantage of the low-cost windows when they see them. Different pockets of liquidity are opening and closing all the time, he says, noting increasing demand from investors in Europe and Asia. At the time of Fibria’s last issue the demand was still majority US and Europe, he says. Bilateral debt can be similar in cost to the bond market at the moment, he explains, though bonds offer larger amounts and longer tenors. Fibria also makes use of pre-export financing, he says, and has negotiated to lower the average costs in this product area to about Libor plus 2.8% now, from Libor plus 4.0%-4.5% at the time of the merger. Fibria raised $1.18bn in a 2-tranche pre-export facility in December. It does not anticipate new equity
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Argentina Agro Gets IDB Support
The IDB says it has approved a $170m loan to Argentina to promote technological innovation in agriculture. The Argentine government will provide an additional $43m in local counterpart funds for the program. The IDB loan is for a 25-year term, with a 5-year grace period and a variable interest rate based on Libor.
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Mexican Microfinancier to Issue Bonds
Mexican Microfinancier to Issue Bonds
Mexico’s Banco Compartamos, the microfinancing bank that lends only to women, will issue 4-year bonds on the domestic market October 6, according to a regulatory filing. Price talk is 130bp-140bp over TIIE, say investors. “Pricing looks very good as it is a good credit, with good capital ratios, especially as other banks price flat to TIIE or in double digits,” says an investor. He adds that despite Compartamos having received criticism that it is not sufficiently stringent with lending conditions, he does not see this as the case, and is looking to participate in the issue. The deal is rated AA minus on a national scale. BBVA Bancomer is bookrunner.
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Su Casita Slams MXP Construction Loans
Moody’s has downgraded Su Casita’s HSCCB 08 series A certificates, secured by construction loans, to Caa2 from Ba2 on a national scale. DCM bankers say the rating action means it will be very difficult for either Su Casita or other private mortgage lenders to issue this type of debt in future. “This market was basically closed after the crisis and given that this is the biggest in the sector, this just confirms it,” says one head of DCM. The ratings action was based primarily on the downgrade of the issuer on September 13 to Caa2 from Baa3 on a national scale. Moody’s also placed the mortgage lender on review for further possible downgrade. The ratings action was taken because the mortgage lender and BBVA Bancomer stopped negotiations for the bank to buy part of its loan portfolio, as they were not able to agree on valuation. Moody’s adds that Su Casita’ liquidity position is weak and the company has funds to cover existing debt only until the middle of Q1 2011, when the company would face a liquidity shortfall. It adds that the pace of home sales is slow and many loans are expected to require an extension.
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Rio, Pernambuco Get IDB Support
The IDB has approved loans for Brazilian cities Rio de Janeiro, which will get $112m, and Pernambuco, which will get $75m. The loans will support the National Tourism Development Program’s efforts to increase employment, revenue, and foreign exchange generated by the sector. The loan for Rio de Janeiro is for a 25 year term, with a 4-year grace period and a variable interest rate based on Libor. The state will provide an additional $75m in local counterpart funding. The credit for Pernambuco is also for a 25 year term, with a 5-year grace period, a Libor-based interest rate and $50m in local counterpart funds.
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Barbados Gets IDB Financing
The IDB has approved a $45m loan for Barbados to promote renewable energy use. The program is expected to generate a net benefit of $284m in fuel and electricity cost savings over the next 20 years, the bank says. The loan is for a 20-year term, with a 5-year grace period, and carries a variable interest rate based on Libor. It is expected to be followed by a second loan of similar characteristics.
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Promerica de Costa Rica Gets Mortgage Boost
The IDB has approved a $15m loan for Banco Promerica de Costa Rica to help the bank expand its long-term mortgage operations and loans for environmentally sustainable projects. “Through mortgage financing, the project responds to an increased demand to channel resources to a population with traditionally limited access to credit for housing.” says Daniela Carrera Marquis, head of the IDB’s financial markets division. Banco Promerica will improve opportunities for the middle-income segment to buy residential property, thus entering a new market and downscaling from its more traditional operations, oriented towards higher income customers. Promerica is part of a regional network that includes financial institutions in Guatemala, Honduras, El Salvador, Nicaragua, Panama, Dominican Republic and Ecuador.