The IDB has signed a $34m 25-year floating rate term loan with 6-years’ grace to help create and diversify products to reach new markets. The technological innovation facility aims to enhance Uruguay’s international position to compete and achieve greater integration into the world economy by diversifying export markets. It is also aimed at weaning the country off a dependency on public sector funds for research and development. The National Research and Innovation Agency (ANII) will carry out the project.
Category: Bonds
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Unidas, Paranapanema Debentures Are Go
Brazil’s CVM has approved a BRL250m debut debenture issue from rental car agency Unidas. The 2012 notes will pay interest at the DI rate plus 2.75%. Itau is managing the sale. CVM also approved a BRL950m convertible debenture issue from metals producer Paranapanema. That offer will come in two series: a BRL200m 2010 tranche paying the IPCA inflation rate plus 6%, and a BRL750m tranche paying IPCA plus 9%. Santander is managing the sale. Separately, developer Trisul has started its debut BRL200m 2013 issue, paying DI plus 2.5%, via Bradesco.
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Fees and Volume Diverge in DCM
Often the big debt trade in LatAm is not the most lucrative for underwriters, and this year’s Dealogic DCM league tables show significant divergence between volume and revenue. Top of the volume charts is Deutsche Bank, with $3.99bn in credit from 9 deals in the year to July 23. But the German house only comes fourth in the fees rankings, with $7.49m, or 5.63% market share. Credit Suisse is the only other top 5 DCM volume player that also appears in the top 5 for deal revenue. The Swiss shop comes second for bond issuance, with $2.79bn in 13 trades, and first for fees, with $11.36m year-to-date, or 8.53% of the market. Half Deutsche’s flow so far in 2008 can be attributed to a $4bn Venezuela sovereign deal sold locally that it shared with Barclays in April. Barclays is number 5 for volume but fails to make top 5 for fees. Nor is the UK shop in the top 10 for LatAm investment banking revenues overall. Meanwhile, BBVA and HSBC also make the top five for DCM volume but fail to achieve a similar standing when it comes to fees. RBS, Itau and Citi are the other three top five revenue shops. They generate more fees than volume numbers would suggest, according to Dealogic data.
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Further Colombia Rate Hike Unlikely: Barclays
No further hikes are expected in the near future from Colombia, according to Jimena Zuniga, an economist at Barclays. “The last three adjustment decision happened when inflation accelerated significantly and unless something like that happens again, the most likely scenario is to leave the rate unchanged at the present level in the upcoming months,” she says. Colombia’s central bank increased its benchmark interest rate by 25bp to 10.00% from 9.75% Friday citing inflationary pressures boosted by food price increases, as well a moderate growth indicators.
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Brazil’s CNAA Clinches IDB Funds
CNAA the startup has clinched a 15-year, $269m A loan from the IDB and a commitment to help it raise an additional $379m for three new ethanol plants in south-central Brazil. The A loan will carry a spread of between 300bp-350bp over Libor, says an IDB official, adding an extra 50bp of padding to the targeted 300bp area CNAA’s CFO Jair Steola told LatinFinance he was expecting earlier this year. The B loan will be syndicated by BNP Paribas, and should begin immediately, say bankers close to the process. The financing package for CNAA will also feature a novel sugar hedge that helps it raise lower-cost financing at longer tenors, says Steoloa. The instrument, to be put in place by Goldman Sachs and or BNP Paribas, is designed to reduce the borrower’s exposure to fluctuating sugar prices for up to 5 years, covering 70% of production. The three new plants are being built in the states of Minas Gerais and Goias and will produce up to 420m liters of ethanol for the domestic market each year, adds IDB.
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Usiminas Fires up Ambitious Syndication
Brazilian steelmaker Usiminas is readying its third foray into the syndicated loan market in a year, this time with an aggressively priced $400m IDB A/B loan, say bankers familiar with the deal. Sumitomo has been tapped to lead the $350m syndication for the 8-year B loan, thanks to an aggressive pitch to underwrite the facility at a margin as low as 75bp over Libor, say bankers away from the deal. Executives involved in the process declined to confirm the figure, but conceded pricing was in the Libor plus 75bp-100bp range. In either case, the margin is tighter than what comparable borrowers have recently sought. For example, in June, Gerdau closed a 3-year $500m facility at Libor plus 125bp. Usiminas’ syndication strategy will involve showing the loan to Japanese banks, say officials on the deal, who point to its strong ties to the country. Nippon Steel is the company’s largest shareholder. Proceeds will help build a new thermoelectric power plant. In February, Usiminas raised $1.3bn in a two-part syndicated loan via HSBC, with 5 and 7 year tenors on a trade facility paying Libor plus 110bp and 135bp respectively, as well as a 2-year liquidity facility at Libor plus 75bp. In June 2007, Usiminas raised a $300m 5-year standby facility via Calyon and HSBC at 25bp over Libor out of the box. The company has also visited the debentures market, issued cross border bonds and tapped bilateral agency funds in the past year to help finance a $14bn expansion program.
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Panama Joins CAF Shareholders
Panama has become a full member of CAF. The Central American country will pay $170m for an undisclosed number of shares in the Caracas-based multilateral to join the its16 other shareholder countries. Panama will also contribute $36m to CAF’s capital guarantee fund. The country has held a $25m stake in the multilateral since 1997, says
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Oi Sees BRL3bn Debt Completing M&A
Telemar, the Brazilian telecom operator also known as Oi, plans to raise BRL3bn in international debt to help finance its acquisition of Brasil Telecom. Options include DCM, a bank loan or multilateral financing. Issuance should come by the end of October and would be the third piece in the fundraising which Telemar expects to total BRL11bn. In addition to using cash, Telemar has issued BRL4.3bn in 8-year CCB bank notes at DI plus 180bp, and placed BRL3.6bn in 1-year paper at DI plus 160bp to fund the purchase. Candidates to lead an international transaction include its CCB lender Banco do Brasil as well as Itau, Bradesco, Banco Real and Santander, managers of the short-term debt sale.
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PDVSA to Buy Back Project Debt
Venezuela’s PDVSA has reached a lock-up agreement with bondholders to buy back 77.23% of the $756m in outstanding debt from the Petrozuata heavy oil project. The deal covers Petrozuata’s 7.63% of 2009 series A, 8.22% of 2017 series B, and 8.37% of 2022 series C bonds. In a tender offer to be launched within 90 days, the state oil company will pay a purchase price equal to par plus accrued and unpaid interest, and 33% of the redemption premium specified in the original bond issue, plus a consent fee of 0.25% on the principal amount. PDVSA also said it repaid the project’s $160.7m bank loan at the beginning of the month. Petrozuata was nationalized last year.
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Mexico Follows Through With Rate Hike
Mexico has jacked up its policy rate by 25bp to 8.00% in an attempt to stamp out inflation, building on a 25bp rate hike enacted in June. This was in line with consensus and the post meeting communique is viewed as broadly neutral. The central bank adds that it will revise its inflation projections July 30 by approximately 50bp on average. The yield curve moved up by 12bp-15bp across the board, says Credit Suisse. “We would not expect another rate hike in August, unless inflation expectations worsen materially. For the balance of the year, we expect just one more rate hike of 25bp,” adds the shop. “We continue to expect Banxico to hike the overnight rate a further 25bp, to 8.25%, this quarter,” says Barclays. Others expect a pause. “We expect the central bank to leave the TdF unchanged at 8.00% until June 2009 as there are no demand-pull pressures on inflation and the balance of risk on growth has deteriorated,” says Goldman Sachs. “If, by the end of 1H2009, actual and expected inflation are converging toward 3.5% (i.e. the middle of inflation target upper half band) then we see the possibility that Banxico could initiate a monetary easing cycle involving three cuts of 25bp apiece, pushing the policy rate to 7.25% by end 2009,” it adds.