Fitch has upgraded Cabei to A- (stable) from BBB+. The agency notes an improvement in the credit quality of Cabei’s founding members, a strong capital base despite vigorous growth, a return of private sector exposure to historic levels and the enhancement of several self imposed corporate governance rules and control techniques. It also highlights Cabei’s preferred creditor status, strong capital base, good asset quality and established track record in terms of self sustainable profitability. Limitations include the volatility of the economic environments in which the institution operates, significant loan concentration and the member countries’ creditworthiness. “The ratings also factor in relatively high average exposure to the private sector,” says Fitch. “As Cabei is one of the few providers of medium-term financing to the region, Fitch considers that its shareholders have a vested interest in supporting it should it run into difficulties.” The Honduras-based bank is 59% owned by its five founding member states: Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua. The remainder belongs to Argentina, Colombia, Mexico, Taiwan, Spain, Dominican Republic and Panama. The bank’s usable capital/required capital ratio remains relatively strong at 2.7x at end-June 2007, says Fitch.
Category: Bonds
Uruguay to Buy Back Global, Local Debt (1)
Uruguay has launched a tender offer for $436m in 10 international series of dollar and Euro denominated bonds. It will pay cash for both of the tender offers, which run through December 7. The government did not set any minimum size for the deal, but can terminate the offer early if the total amount of bonds tendered reaches $200m. The eight dollar issues range from 2008 to 2012 maturities paying interest of 7.000%-8.375%. The Euro bonds up for tender are the 7% of 2011 and 7% of 2012 issues. Separately, Uruguay announced a tender offer for up to $300m of $1.55bn in 24 series of dollar-and inflation index-denominated domestic bonds. Citi is dealer manager on both tenders.
Uruguay to Buy Back Global, Local Debt
Uruguay has launched a tender offer for $436m in 10 international series of dollar and Euro denominated bonds. It will pay cash for both of the tender offers, which run through December 7. The government did not set any minimum size for the deal, but can terminate the offer early if the total amount of bonds tendered reaches $200m. The eight dollar issues range from 2008 to 2012 maturities paying interest of 7.000%-8.375%. The Euro bonds up for tender are the 7% of 2011 and 7% of 2012 issues. Separately, Uruguay announced a tender offer for up to $300m of $1.55bn in 24 series of dollar-and inflation index-denominated domestic bonds. Citi is dealer manager on both tenders.
Ecuador Gets $62.2m IDB Loan
Ecuador has secured a $62.2m 20-year loan from the IDB for the renewal of the TAME Línea Aérea de Ecuador aircraft fleet. The deal carries a national government guarantee, has a one-year grace period, and pays a variable interest rate. “The program will facilitate integration and connectivity in Ecuador, especially among the country’s most isolated and disadvantaged areas, through improvements in the operations and commercial air transportation services provided by TAME,” says IDB team leader Esteban Diez-Roux. “The aircraft fleet will be renewed and the company’s business capacity will be strengthened,” he adds. The deal supports the purchase of two Embraer ERJ-190AR aircraft to modernize TAME’s fleet and improve the provision of air services.
BBVA Sees Value in Argentina Warrants
BBVA says Argentine GDP warrants are cheap to fair value, “. The government has announced the GDP Warrant Second Coupon Payment, and we take this opportunity to review our views on the instrument and its fair value calculation. This week, the government informed that it would pay 1.32 cents a dollar per 100 GDP Warrants at nominal value. Based on a Monte Carlo model, GDP Warrants in dollars currently trade at a cheap to fair value of $19/$20. The instruments closed yesterday at $13. We are quite confident that GDP Warrants will return to fair value when external market conditions stabilize.
Colombia’s Telefonica Brings Challenging Loan
Amid the stormiest conditions of the year for LatAm borrowers, the Colombian arm of Spain’s Telefonica has launched an A/B loan worth $600m. The IDB and four other bookrunners – Citi, BNP, ABN AMRO and Santander – are syndicating out a $475m 5-year amortizing loan paying 125bp over Libor out of the box, based on a leverage grid, say bankers familiar with the terms. Pricing moves on a leverage grid between 4.0x, where it pays 150bp over Libor, and under 2.5x, where it pays 75bp over Libor. Current leverage is 3.0x-3.5x and the deal has 3 years’ grace. MLAs are being offered $50m tickets for an up-front fee of 50bp. Lead arrangers can take $35m for a 30bp fee, while arrangers can have a $20m ticket for 15bp. Bookrunners are apparently seeking five MLAs. The IDB is also doing a $125m 7-year A loan, which pays 145bp over Libor out of the box. Poor timing will test the deal, which has been waiting in the wings for months. In the past week, credit market conditions have deteriorated further, sapping bank market liquidity at a time when lenders typically close up shop. Given this backdrop, the transaction, whose bank meeting was heard to be underattended, may struggle to gain momentum. Telefonica will likely have to wait until January to wrap up syndication.
Grim Cross-Border Debt Outlook for Remainder of 2007
Meanwhile, with year-end fast approaching and a string of bad days in the market, bankers and issuers expect little to no more cross-border DCM activity until 2008. The list of pulled deals since the Fed’s 50bp October rate cut is long and well-known, including names such as Sanluis, Cap Cana, Unialco, Banco Macro and Banco Mercantil. “The market is categorically closed for emerging markets and high-yield issuers,” says a LatAm DCM banker among those with an unfinished 2007 pipeline, noting that there is still a window in the local markets. Although homegrown Latin problems are relatively few, a January market reopening will depend on external factors. If news from the next Fed meeting and the big banks’ Q4 reports is encouraging, business as usual may resume in the New Year.
IDB Signs Brazil Port Financing
The IDB has approved $144m in financing for Itapoa Terminais Portuarios for a private greenfield container terminal in Brazil’s Santa Catarina state. The package comprises an IDB loan of up to $57.6m from the bank’s ordinary capital and approximately $86.4m of co-financing from commercial banks. The project, dubbed TECON Santa Catarina, consists of the design, construction and operation of the port, including a quay and access bridge, container yard and administration buildings, general installations such as utilities, and other necessary equipment. It will add an additional 300,000 containers per year in port capacity, says the IDB.
IDB Lends $50m to Peru’s Sedapal
The IDB has approved a $50m loan to support the first phase of the Sedapal Lima water utility’s “Water for All” program. The program extends water and sanitation coverage in the outlying areas of the city. Sedapal expects to invest $1.4bn through 2011, to be raised through company generated cash flow, external loans, and state funding.
PDVSA to Buy Back Bonds
PDVSA plans to launch a tender for 79% of three series of bonds tied to the Cerro Negro crude oil project. The tender for 7.33% of 2009, 7.90% of 2020 and 8.03% of 2028 issues will go ahead before the end of the year. PDVSA did not say how much of each set of bonds it would buy back. The purchase price will be equal to par plus accrued and unpaid interest and an amount equivalent to 33% of the redemption premium in the indenture, says PDVSA. Bondholders entering into the lock-up agreement will sell back all of their bonds, as well as any they may subsequently acquire, it adds.