CAF, the Andean multilateral is looking to extend out to 20 years with its Peru bond program, setting a long duration benchmark for Peruvian entities, Gabriel Felpeto, director of financial policies international issues at the bank tells LatinFinance. “We’re trying to do long term bond issues in local currencies,” says Felpeto. “We’re looking at doing issues in the Peruvian market up to 20 years,” he adds. CAF has already done 12 years in soles and is looking to do at least 15 years in that market. Felpeto adds that CAF’s A/B loan structure is also being used to lengthen duration for domestic entities.
Category: Bonds
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CAF Eyes Bolivia Issue
CAF, the Andean multilateral is planning a trailblazing issue in Bolivianos, the first time in recent memory a bond deal has been done in that currency. CAF is working with the regulators in Bolivia and expects to issue there in 2008, Gabriel Felpeto, director of financial policies international issues at the bank tells LatinFinance. Meanwhile, CAF is planning more debt issuance after it approved earlier this week $1.3bn to fund various projects across Latin America. It tends to issue roughly 50% in dollars, 20% euros and the rest in local currencies, though Samurais are also an option.
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Pemex Eyes Domestic Bond Issue
Pemex has $1bn-$2bn in funding needs for this year, roughly half of which will come from export credit agencies (ECAs). It already has lines with Eximbank, JBIC and European ECAs. With pre-funding for 2008, the market target is around $1bn, which will be placed locally later in 2007, Pemex associate managing director of finance Mauricio Alazraki tells LatinFinance. “This will be done opportunistically. It’s not a necessity,” says Alazraki. “It could be a longer dated bond, 20 or 30 years,” he adds. “The whole curve is open.” Pemex is also considering fine tuning the dollar and euro curves, substituting illiquid bonds with larger more efficient issues. But pesos are the most attractive after the swap. “The market that’s cheapest is the local market. Certificados bursatiles, if you translate to dollars, it’s the cheapest funding source,” says Alazraki, who has extensive experience in all of the debt markets open to Latin issuers. “For the bulk of our funding needs in the future, the Mexican market is the main option. Probably, after that it would be the bank market,” he adds. (For more on this interview, see www.latinfinance.com).
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Santana To Head Brazil Regulator
Maria Helena Santana, commissioner of the CVM, Brazil’s market regulator, was tapped by finance minister Guido Mantega to become the president of the commission, replacing Marcelo Trindade, who was expected to step down following a three-year term at the helm of the CVM. Before joining the regulator in 2006, Santana spent12 years at the Bovespa working alongside Raymundo Magliano Filho, the exchange’s president. Speaking on the sidelines of a conference a week ago, Santana told LatinFinance the CVM has recently upped its scrutiny of pre-IPO executive compensation packages and loans from underwriters. She will be the first woman to head Brazil’s market regulating agency.
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Investors More Interested in Microfinance: S&P
Microfinance is increasingly on investors’ radar screens and S&P is raising coverage of this sector, which is expected to yield deal flow in the Latin capital markets. “The lack of consistent metrics for analyzing MFIs [microfinance institutions] has hindered investment at a time when microfinance is growing at a significant rate,” says Cynthia Stone, managing director and chair of S&P’s EM council. “And despite the level of interest, mainstream investors need standard metrics before they can invest in this particular sector.” S&P says its new report on the sector provides needed recommendations for a rating methodology that can be used globally and consistently to rate MFIs within countries, across borders, and across asset classes. In May, S&P graded the first publicly rated microfinance CDO and it expects to rate an additional two to three transactions in the months ahead, with issuance levels potentially reaching $500m by the end of 2007. “As the existing microfinance institutions also become adept at handling this new inflow of funding, and more MFIs enter the market, securitization volumes could reach between $1bn-$3bn annually over the next decade,” says S&P.
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Gerdau Buys Venezuela Producer Zisuca
Brazilian steel-maker Gerdau has agreed to pay $92.5m for Venezuelan steel producer Siderurgica Zuliana the company said in a note to the Brazilian regulator, CVM, Monday. The company has followed an aggressive strategy of acquisitions in recent years adding steel plants in the US, Mexico and Central America. This is Gerdau’s first investment in Venezuela, which has enjoyed economic growth of more than 10% in the past two years, the steelmaker points out.
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CAF Goes for Yen Financing
CAF, the Caracas-based Andean development bank, tapped the Japanese bond market for a combined $245m worth of local currency bonds Thursday. The bank issued JPY20bn in 2010 notes at Yen Libor plus 22bp, to yield 1.67%, and JPY10bn in 2014 notes at Yen Libor+37bp to yield 2.32%. Pricing came at the tight end of guidance of 22bp-26bp and 36bp-40bp respectively. The bonds are rated A+/A+/A1 and proceeds were immediately swapped into dollars. “The spread was actually in line with our USD curve so we don’t have to pay any additional [cash] after the swap,” Gabriel Felpeto, CAF’s director of financial policy, tells LatinFinance. This is CAF’s sixth issue in Japan, the last of which came in 2005. The development bank’s financing needs for 2007 are between $800m and $1bn and so far, it has raised $600m, says Felpeto, leaving up to $400m more in potential issuance through the end of the year. The Samurai was aimed at diversification of the investor base.
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Citi Merges Bonds and Loans
Citi has consolidated its LatAm loans and DCM team into a single credit markets group led by Mario Espinosa, former head of loans, and Chris Gilfond, former co-head of DCM. They report to Ricardo Braga, head of fixed income, currency and commodities for Latin America, and Atiq-Ur Rehman, head of EM DCM. The group will combine DCM, syndicated loans, and local DCM and offer liability management, private placements, hybrid capital securities and source loan assets for distribution through EM credit trading. Carlos Corona will lead international bonds and loans coverage for Mexico, working with Humberto Cabral on the local DCM side. Brazil will be led by Sandy Severino, Eduardo Cutrim and Hamilton Agle. In the southern cone, Adrian Guzzoni, Juan Cristobal Peralta (Chile) will lead. In Central American and the Caribbean, Blake Haider and Fabian Kiel (Trinidad and Tobago) take charge. Haider will also have responsibility for the Andes, along with Adrian Guzzoni, Rocio Arbelaez (Colombia) and Denis Gray (Peru). Luis Carlos Nuñez is taking on a new role focusing on emerging and middle market companies, sourcing bond opportunities and/or assets for distribution through Citi’s credit derivative loan distribution program. He will also continue to do local market access trades. John Hartzell, former DCM co-head with Gilfond, is now head of LatAm trading.
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Credit Suisse Cleaning up in LatAm
It may not be the top of the volume league tables, but Credit Suisse is making the most money overall from M&A, DCM and ECM, Dealogic data shows. For the year to mid-May, the Swiss bank has booked almost $104m in disclosed fees. In second place is UBS, which books close to $97m, more than 80% of it from equities. The bulge bracket house with presence across the three sectors that does worst for disclosed fees ($17.2m) is Morgan Stanley. (For full tables of volume and fees, see the June issue of LatinFinance.)