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.
Category: Bonds
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.
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.
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.
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.
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.
America Movil Secures ECA Funds
America Movil has wrapped up $1.5bn in ECA financing through Citi to build out its 3G and GSM networks throughout LatAm. Citi says the package includes a €500m loan insured by Finnish ECA Finnvera and 2 facilities insured by Exportkreditnamnden (EKN), the Swedish export credit agency, consisting of a €300m floating rate loan and a $471.5m fixed rate loan through AB Svensk Exportkredit. All 3 loans are long term credits, with final maturity in 2016 or later. In addition, DekaBank Girozentrale also participated in the financing, says Citi. The Finnvera loan signed in early November, the EKN floater mid-December, and the EKN deal in March. “This financing enables us to continue with the rollout of our investment plans to strengthen our 3G and GSM networks in Latin America,” says America Movil CFO Carlos Garcia Moreno. “This is essential to advance our growth plans in the region and consolidate our position as the leading wireless services provider in Latin America and the fourth largest in the world in terms of equity subscribers.” Milbank, Tweed was the lawyer on the financing.
Arca Prepares Local Bond Return
Embotelladoras Arca is preparing to return to Mexico’s local DCM, raising up to MXP1.5bn. The Mexican bottler rated AAA on a national scale is readying a 2012 floating tranche and a 2016 fixed rate tranche, possibly coming to market in early June, according to a banker on the deal. HSBC, BBVA and Bank of America are managing the transaction. Arca was one of the first issuers out of the gate in February, after a long dry spell for Mexican DCM, pricing MXP1.4bn in 13-month bonds at the 28-day TIIE plus 155bp.
Cheap Chile Funds Lure Foreign Issuers
DCM bankers are pitching various foreign borrowers the idea of bond issuance in Chile’s domestic market, following American Movil’s blowout April deal. Peru’s BCP has filed for a program in Chile, according to officials at the bank, and it could become the second issuer in that format. Hugo Horta, head of DCM at Chilean boutique IM Trust tells LatinFinance that his shop and competitors are pitching several potential issuers in Mexico, Peru, Colombia and Brazil. New York-based bankers at other shops confirm they are actively marketing the structure. The funding is attractive in dollar terms and Chilean institutional investors are hungry for diversification, says Horta, who declines to name companies he is pitching. America Movil offers most of the important characteristics that other issuers would need – high quality credit in a defensive industry well understood in Chile, in which the borrower also has sizeable domestic operations – local DCM bankers say. “There is not a company in Chile as large and as successful as America Movil is in its sector – this is an advantage,” says Horta. America Movil priced April 18 UF4m ($145m) in 5-year AA+ rated bonds on Chile’s domestic market at 98.61 with a 3.00% coupon to yield 3.31%, or 141bp over the government, after drawing demand of around UF6.4m. According to the issuer, the price equates to roughly 4.5% in dollars, and was reduced from an initial 3.5% yield target. The America Movil dollar-denominated 5.5% of March 2014 was yielding roughly 6.0% at the time, and the issuer scrapped a tabled CLP piece since demand was biased towards UF. Banchile-Citi managed the sale, which comes from a $1.2bn shelf and America Movil – one of the region’s most sophisticated issuers – says it plans to return to that market. The Mexican wireless provider claims it is the first “huaso” bond, or issue in Chilean currency placed directly by a foreign entity. Bankers explain that if conditions that allow for such pricing hold, Chile’s market wil
CAF Files USD Debt Shelf
Andean multilateral CAF has filed a $1.5bn shelf with the SEC, including $1.0bn in previously registered but unsold securities and $500m in new capacity. The development bank plans to use proceeds to fund its lending operations. It did not list any bookrunners or give an indication of when issuance might start. CAF has previously said it plans a dollar bond this year, as part of a plan to borrow $600m-$800m from various international markets. It has already started, having 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.