Former Citi LatAm banker John Hartzell has resurfaced as managing partner at Milton Point Capital, a US-based investment manager. The former Citi LatAm DCM co-head left the firm last year after almost 15 years of service. Hartzell departed the DCM group in early 2007 to head LatAm trading at Citi and was latterly involved in finding derivatives solutions for corporate clients in the region. Hartzell declines to comment on his move to the buyside.
Category: Bonds
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Paraguay to Get $100m 20-Year
The IDB has approved a $100m loan for Paraguay. The loan, says the IDB, will allow Paraguay to boost its institutional capacity in the public sector through the modernization of different public expenditure management processes and systems. The loan is for 20 years, with a five-year grace period, and carries a Libor-based rate.
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IDB Expands Concessionary Funds
The IDB has increased the amount of concessionary funds available for Bolivia, Guyana, Honduras and Nicaragua to $485m per year in 2009 and 2010 from $349m annually in 2007 and 2008. Bolivia will be able to increase its borrowing from the IDB to $157.4m from $113.2m yearly. Honduras will be able to borrow $165.7m yearly during this period, up from a previously approved limit of $119.2m. For Nicaragua, the limit will rise to $133.5m from $96.0m, and Guyana will be able to borrow up to $28.6m, from $20.6m.The loans should allow the countries to overcome the effects of the global economic crisis, says the bank. Resources for the loans will come from the IDB’s ordinary capital and its fund for special operations.
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Corrections: Itau Chile/Bimbo Peso Benchmark
June 3 Daily Brief “Itau Chile Readies Local Bonds” incorrectly states the lead manager on Itau Chile’s domestic bond transaction. Itau Chile is managing the sale, rated AA minus on a national scale. Separately, June 3 Daily Brief “Bimbo Edges Closer to Peso Benchmark” incorrectly attributes the rating on Bimbo’s upcoming domestic bond transaction. Moody’s rates the transaction Aa2.
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MRV Plans Follow-On
MRV, the Brazilian low-income residential real estate developer, plans to issue up to BRL550m in shares, according to a statement filed with the CVM. The company is planning between BRL250-BRL450m in new shares, and BRL70m-BRL100m in secondary securities. The offering will represent 10%-12% of the company’s total capitalization and Credit Suisse and UBS Pactual are leading, says MRV. “This news reinforces our view that growth expectations are improving and probably much faster than expected,” says JPMorgan. “We estimated that MRV would be [free cashflow] positive next year, and with leverage at only 24% in Q1 we believe that it is quite early to raise equity now, so we would need more information from the company to understand its plans for this money,” it adds. In the month through May 29, MRV shares rose 46%, topping the list of performance for listed real estate companies in the region, says JPMorgan. The shares close Tuesday at BRL24.20, down 7.3%, much steeper than the 0.9% retracement in the Bovespa. The company’s July 2007 IPO priced at BRL26.00. In April, MRV approved a sale of BRL200m in long and short-term debt. Half the amount is set to come in 3-month promissory notes, with the remainder in 2011 debentures. Both are set to price at DI plus 3.7%, says MRV.
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Rede Offers to Buy Back Perps
Rede Energia has launched a cash tender offer for its 11.125% perpetual bonds. The Brazilian power distributor can purchase up to BRL300m-equivalent in dollars through the offer expiring June 26. Accepting holders are set to receive $400 per $1,000 tendered, plus a clearing premium of up to $80 to be determined through a modified Dutch auction. Holders tendering before June 12 will receive an extra $50 per $1,000 principal. Bank of America and Planner Securities are dealer-managers. Rede plans to fund the buyback using proceeds from an upcoming issue of BRL320m in 1-year promissory notes expected to pay 120% of DI. Rede sold $575m of the perpetual bonds in 2007 via Merrill Lynch. There are currently $400m outstanding, trading recently at 33-35, according to data from Credit Suisse.
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CAF Brings Generous Jumbo
The highest rated LatAm issuer, CAF, delighted investors Thursday with a generously priced and well bid $1bn 10-year, its biggest bond issue to date. The A+ rated development bank priced at 99.825 with an 8.125% coupon to yield 8.151%, or 450bp over US treasuries. CAF started the morning whispering mid-400s on a benchmark sized deal and launched at 450bp. Investors had expected a deal after CAF’s filed this month a $1.5bn shelf, but they were surprised by such a large size – double any of the Andean multilateral’s previous issuance – and found yield above 8% attractive for an A+ credit. The new issue was trading up 1-2 points in the gray Thursday afternoon, say bankers away from the deal, implying cheap pricing. “They played it safe and left about 10bp-20bp on the table in order to get a good execution,” says a US-based EM dedicated investor. Bankers away from the transaction put the concession somewhere between 30bp-50bp, calling that reasonable considering size and the choppy trading in outstanding bonds. The book reached more than $3.5bn from 160 accounts, according to bankers on the deal, who say it was the issuer’s broadest ever distribution. Some 65% was EM and the rest high grade. Proceeds from the sale will go to general corporate purposes, including funding lending operations. Bank of America-Merrill Lynch and Credit Suisse managed the transaction. CAF last hit the dollar markets in January 2008 with a $250m 5.75% 2017 via Credit Suisse, Merrill and HSBC. Its largest issue before Thursday was a $500m 5.2% of 2013 bond, sold in 2003 through Merrill, CS, Deutsche Bank and Goldman Sachs. This year, it has sold COP240bn ($95m) in 2014 and 2019 bonds in Colombia in April, and JPY10bn ($108m) in 2019 bonds with a single Japanese investor in February.
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T&T Gets $49m from IDB
The IDB has approved a $48.75m loan to Trinidad & Tobago so it can improve its education system’s quality. The total cost of the first phase of the program is $62.50m. T&T, says the IDB, will contribute $13.75m to its execution. The program will finance the construction, upgrading and equipping of 50 early childhood care and education centers and the development and implementation of an extensive training program for their staff. The IDB loan is for 20 years, with a 4-year grace period and an interest rate based on Libor.
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Sterling Window Opens for LatAm
Other high-grade LatAm issuers like Petrobras, Vale and America Movil will have access to the sterling market following this week’s Pemex issue, say LatAm DCM bankers. Those with a global business or needing UK currency exposure are among the most likely names. And borrowers who have overused US markets are also candidates. However, the costs of diversification may deter issuance short term, other bankers add. And a LatAm banker at a European shop says GBP generally is challenging market and tricky to follow. Other issuers are possible, but not very likely, he adds. “You have to be high grade,” says a banker close to the sterling market. He adds that LatAm sovereigns are unlikely to use the funding alternative. “Most are comfortable with where they are in dollars. They would rather put all the liquidity in the dollar curve,” says the banker at a European shop. Other LatAm past issuers in sterling include Mexico and CAF.
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IDB Approves Loan for Brazilian City
The city of Ceara, in northeastern Brazil, is getting a $77m loan from the IDB so it can improve its health services. The loan will support the construction of a regional hospital in the region of Sobral; 9 polyclinics and 11 dental clinics. The loan will also finance the acquisition of medical and dental equipments for the new facilities and measures to improve health care management and the quality of services. The loan is for 25 years, with a 5-year grace period, and carries a Libor-based variable interest rate, the bank says. The state of Ceara will provide $46.5m in counterpart funds.