The IDB has approved a $100m loan for the Dominican Republic to help build 34 schools, refurbish more than 200 schools and stock classroom libraries. The loan is for a 25-year term, including a 5-year grace period, at a Libor-based interest rate. The government of the Dominican Republic will provide $10m in local counterpart funds. Separately, the IDB has approved a $50m loan for Venezuela to improve drinking water service quality. The government will provide $25m in local counterpart funds, taking total funding for the program to $75m. The IDB facility will have a 25-year term, with a 5-year grace period, at a variable interest rate based on Libor.
Category: Bonds
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ACCION Mines Brazil’s North
Global microfinance organization ACCION International is expanding in Brazil after president Lula approved its application to establish a unit in the state of Amazonas. The IDB’s Multilateral Investment Fund will take an 18.1% stake in ACCION Microfinancas. Private investor Luiz Felipe D’Avila and other private investors will own 8.5%, and ACCION will hold 73.4% of the organization. ACCION will start operations in Manaus, the largest city in Amazonas, with plans to extend to cities throughout Brazil’s northern region. The area is home to an estimated 1.9m micro entrepreneurs, just 8%-10% of who have received any kind of loan from a bank or microfinance organization, says ACCION. It issued its first microloan in Brazil in 1973. Partner microfinance institutions operate in 23 countries in LatAm, Asia, Africa and the US. In the last decade, ACCION partners have disbursed more than 28.5m loans totaling $23.4bn.
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Itau Adds NY Bankers
Itau has added 2 bankers to its New York office, according to an official at the Brazilian bank. Ricardo Navarro joined the DCM team this month from Stark Investments in Miami, where he went after leaving Deutsche’s DCM team in 2008. Baruc Saez, who was at Marathon Asset Management for 4 years, also after working at Deutsche Bank, joined last week and will work on special situations.
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Batista Shipping Unit Edges to Float
OSX, the Brazilian offshore shipping company being formed by Eike Batista, is a step closer to going public. The company filed its charter with the CVM late Friday detailing rules surrounding capital and governance structure. It says it has been authorized by the board to raise equity capital of up to BRL10bn through the placement of ordinary shares. It does not state whether this would be done on the public market or with private investors. However, OSX has been widely cited as one of the main candidates for an IPO in 2010. In its charter, OSX says its goal is to be involved in shipbuilding as well as providing equipment and services for offshore oil and gas. Among the first steps for the company is to build a shipyard in the port of Biguacu, in the state of Santa Catarina, where OSX has already acquired most of the necessary development rights. The facility is expected to command an investment of $500m-$600m. The goal is to produce standardized vessels for exploration of Brazil’s offshore fields and lease them to Batista’s oil and gas company OSX, as well as to Petrobras and others in Brazil. Batista says much of the financing for the shipyard itself may come from the BNDES, due to alignment with Brazil’s plan to develop its natural resources. He also notes talks with Singaporean and Korean builders to have them build and develop the facility in exchange for a minority investment in the company. Batista’s recent focus on OSX has drawn attention away from an earlier plan of his to take public EBX, the holding company for all of his infrastructure companies, say executives close to Batista. The executive originally planned to raise up to $10bn on the stock market to capitalize the holding company and reduce subsidiaries’ reliance on the whims of the capital markets. As market conditions deteriorated, the plan became to raise a similar amount of cash via a giant infrastructure private equity fund. That idea seemed to fall on deaf ears with potential investors and sov
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Mexico Gets IDB Education Loan
The IDB has approved a $100m loan to Mexico to help it improve education in isolated villages and indigenous communities. The total cost of the new program is $166.7m, with local counterpart funds accounting for $66.7m equivalent. The $100m IDB loan is for 25 years with a 4.5 year grace period and an interest rate based on Libor.
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Ecopetrol Gets US Exim Loan
The US Exim Bank has approved a $1bn preliminary loan commitment for Colombia’s Ecopetrol, it says. The state-controlled oil company will use the funds to purchase goods and services from US providers as it develops reserves and upgrades refineries. Ecopetrol will have the opportunity to convert the commitment into specific medium- and long-term loan and guarantee transactions during the next two years, the bank says. Further details have not been negotiated, according to a US Exim spokesman. Ecopetrol, which had almost no debt of any kind one year ago, sold $1.5bn in 7.625% 2019 bonds last year in a well-received transaction, and aims to become a more frequent borrower as it funds a massive investment plan.
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GEM Fund Laps up Brazil Milk
The Global Yield Fund of New York-based private equity firm GEM has agreed to invest up to BRL120m to acquire shares of Brazil’s Laep Investments via a private placement, the latter says in a regulatory filing with Brazil’s securities commission, without specifying how many shares this could entail. GEM’s fund also has the option to acquire an additional 30m shares at BRL3.00 per share. Proceeds will be used to strengthen Laep’s working capital. Laep has a market cap of BRL409m and 162,431 outstanding shares, according to Economatica. Laep shares closed at BRL2.52 Monday. Bermuda-registered Laep controls Brazilian companies Lacteos do Brasil and holds shares in Parmalat Brasil, PRLT, Integralat – Integracao Agropecuaria, Integralat – Integracao Agro-Negocios, In Vitro do Brasil, Companhia de Alimentos Gloria, Companhia de Alimentos Ibituruna, and Mayoria. GEM has $3.4bn in assets under management.
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StanChart Extends Buildout with DCM Hire
Standard Chartered has hired Rodrigo Gonzalez, a former Dresdner origination banker, as a director in charge of DCM for LatAm, extending a substantial buildup in its LatAm fixed income business. Gonzalez transferred with Dresdner to Sao Paulo in early 2008 and most recently assisted Commerzbank in its attempt to divest the Dresdner Brazil unit it acquired later that year. Gonzalez will report to Steve Aloupis, head of capital markets for the Americas, in charge of loans, syndications and DCM. Aloupis says Brazil will be an important focus for the burgeoning DCM group. It should enjoy the support of a lending and syndications platform that has historically had a particularly strong track record in financial institutions coverage, as well as trade finance and correspondent banking. Loan market coverage will expand to support DCM origination, say StanChart executives. Following the arrival from Lehman last year of Mohammed Grimeh, head of global markets for the Americas at StanChart, the UK bank announced in October it had hired Michele Nicoletta to head credit trading for the Americas, Harvey Black as head of investor sales and Nilson Strazzi as head of bank sales. Both were joined by additional staff. Alexis Lasser also joined at the time as head of illiquids and private placements. Russell Ashcraft runs the bank’s bond syndicate.
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Surprise Quasi-Sovereign Activates DCM
Brazil’s BNDES has inaugurated what should be a busy 2010 for DCM, beating sovereigns to the punch with $1bn in 2020s priced tighter than investors wanted. The issuer landed bang on 187.5bp-area guidance, some 70bp-80bp wide to the sovereign and 15bp-20bp above existing BNDES 2019s, say bankers and investors. The government development bank priced the Baa2/BBB minus bond at 98.949 with a 5.500% coupon to yield 5.634%, or UST plus 187.5bp. The deal ended flat to slightly down, traders say, likely owed to tight pricing. The book was heard to reach almost $3bn, with the BNDES indicating in the morning that the bond would not grow. “There should be a rush to get out the door – issuers want to get deals done before Treasuries rise,” says a major London-based EM investor who passed, noting a thin spread to the sovereign. The investor adds that that with US data improving, interest rates may rise sooner than expected. About 55% of the 2020 went to US investors, 35% to Europe and 10% to Asia and LatAm, according to bankers on the sale, who also note significant US high grade presence. “Crossover from high-grade buyers becomes more with every [LatAm investment grade] transaction,” says a banker managing the sale. Barclays and HSBC ran the sale, which comes 6 months after a $1bn 2019 bond priced to yield 6.45%. The BNDES has become a more regular issuer since returning in May 2008 after a 7-year hiatus, and should be much more frequent as it continues to bolster the Brazilian corporate sector. Bankers away from the trade note that it might serve as a useful benchmark for Banco do Brasil, rumored to be coming soon with a 10-year. Investors also expect Mexico, Colombia or the Brazilian sovereign to tap this week, as per tradition, and note there is still plenty of money to be put to work.
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Jamaica Gets Crime Fighting Aid
The IDB has approved a $21m loan to Jamaica to finance crime prevention and strategic interventions. The loan, denominated in USD, has a 25-year term and a 4-year disbursement and grace period. The interest rate on the facility is basis Libor.