Category: Bonds

The IDB has approved a $500m loan for Panama. The loan is expected to partially offset a shortfall in USD denominated lending to the productive sector. The shortfall is a result of the global financial crisis, the bank says. The loan is for a 5-year term, with a 3-year grace period, at an interest rate based on 6-month Libor plus 400 basis points. Meanwhile, the IDB has approved a $285m loan for Uruguay to streamline the tax system and improve central government efficiency. The loan is for a 20-year term, including a 5-year grace period, with a variable interest rate based on Libor.

Major regional mobile telecom America Movil has secured a $1 billion 10-year loan from the China Development Bank (CDB). Pricing is in line with other ECA financing, at slightly above 100bp over Libor, highly competitive versus the volatile bank market. “We likely will have this line closed before end of the month,” America Movil’s CFO Carlos García Moreno tells LatinFinance. Proceeds will be used to finance purchases of equipment from China. Huawei is one of the suppliers. Telemar last month got a $300m loan from CDB. The 7-year facility pays Libor plus 250bp and features a 2-year grace period. The Brazilian telecom, also known as Oi, plans to use proceeds to finance its 2008-2009 investment activity in China with network equipment supplier Huawei.

Colombian holding company Colinversiones has secured $65m in long-term funds from CAF to upgrade its Termoflores power generation plant. The company will boost capacity of the plant to 610MW from 441MW, CAF says. Colinversiones recently told LatinFinance it was negotiating a $130m 12-year loan with CAF and the IFC. The company recently funded itself with a $300m bridge from Bancolombia, but securing long-term financing to support investment is part of the investment plan. Colinversiones has interests in the energy, financial and other sectors.

Colinversiones, the Colombian firm with interests in the energy, financial and other sectors, is negotiating a $130m 12-year loan with CAF and the IFC. The credit should be finalized this month or next, president Juan Guillermo Londono tells LatinFinance, declining to speculate on price. The company recently funded itself with a $300m bridge from Bancolombia, but securing long-term financing to support investment is part of the investment plan. Londono says multilateral rates are more attractive. Colombia’s Empresas Publicas de Medellin recently secured a $450m IDB facility at just 20bp over Libor on a 25-year term, with a 6-year grace period. Colinversiones is looking to fund expansion in the electricity generation sector, a focus that will see it divest holdings in non-core areas over the long term. “In the energy sector, there are favorable conditions for the entrance of new players,” says Londono. He adds that it is a diverse cash generating sector driven by an imbalance – about 1.8x – between demand for electric power and supply. “We are expanding first our current plants, and second designing and building new projects, as well as continuing to expand through acquisitions, including some international expansion in the medium-term,” says the official. Although there is interest, Londono says there are no immediate plans to tap Colombia’s liquid domestic bond market.

The IDB and the BNDES are within months of issuing an RFP seeking financing proposals for a $9bn Brazil project, say executives involved in the process. The venture to construct a high-speed train between Sao Paulo and Rio de Janeiro has gained traction, despite a challenging financing environment and apparently no specific allocation for the project within the federal government’s national infrastructure plan. The most recent version of the rail plan is understood to have been set in motion by Italian engineering and infrastructure shop Italplan. Several global shops including Allstom, Mitsubishi, Siemens and Bombardier, are heard to have expressed interest in the concession. While a large portion of the financing is likely to come from the IDB, BNDES and likely other multilaterals, as well as ECAs, executives involved believe commercial banks will have to provide a significant chunk of the funding. The IDB and BNDES have hired Shearman & Sterling for legal counsel on the project.

CAF has sold COP240bn ($95m) in fixed-rate bonds on Colombia’s domestic market. The multilateral priced COP112bn in 2014 bonds at 9.60% and COP128bn in 2019s at 10.79%. Total demand exceeded COP300bn, according to bookrunners. The deal is CAF’s third placement in Colombia, and follows a COP240bn sale in December. BBVA managed the sale. CAF is rated A1 on a global scale. The Colombian debt market – LatAm’s most active local forum this year – awaits a COP200bn placement from power grid operator ISA today. The issue in 2 tranches worth some $80m with 6 and 9 year maturities, could grow to $100m equivalent and marks ISA’s first local tap since December. Correval, Citi and Bancolombia are leading that transaction.

Multilateral support will be vital for LatAm, particularly if access to credit market remains constrained for several years, a study conducted by the IDB shows. “The region’s 7 biggest economies need to finance $400bn of maturing public debt in the next 2 years and may potentially need another $200bn to finance their growing budget deficits,” the IDB says. The study recommends the multilateral system should help countries achieve sustainable fiscal positions gradually while protecting social programs and enhancing productivity. In addition, it says multilateral institutions should shift their policies towards long-term financing from short-term emergency lending.

The Central American Bank for Economic Integration (Cabei) plans to continue issuance in Taiwan, Costa Rica and Colombia as it meets 2009 funding needs of $500m. No decisions have been made, but Treasurer Jose Felix Magana tells LatinFinance the placements so far this year — $20m in Costa Rica, $107m in Colombia and $190m in Taiwan – have gone better than expected. “There was demand left behind, and we could execute in one or all of those markets again this year,” the official says. Magana adds there could also be more Honduras placement, after $5.5m last year, and the bank is evaluating a previously untapped market in both Asia and Latin America. “We’re trying to use our good credit to educate [issuers] about longer tenors and different types of products,” he says, noting that this is not limited to bonds. Cabei plans a $100m regional commercial paper program, with tenors of 30-360 days in new markets, for this year. It will also replace an existing CP program for US and European issuance with a $500m program by the end of April. Magana says Cabei has no need to place dollar bonds, though it does not rule out the possibility. The bank estimates it will lend $1.3bn this year, versus $1.6bn in 2008.

Korea’s Export-Import Bank and the IDB are signing an agreement to co-finance public and private sector projects worth as much as $2bn in the next three years in LatAm and the Caribbean. The banks will work together identify and finance projects in infrastructure, information technology, trade finance and other areas.