S&P has raised Jamaica’s ratings to B minus from C with stable outlook following the country’s completion of its debt restructuring. The debt exchange, which the government launched on January 14 and concluded on February 24, affected roughly JAD700bn of domestic debt, or about 50% of Jamaica’s total public debt, S&P says. The government’s external debt was excluded from the transaction. The participation rate in the restructuring was 99.2% of eligible claims, with 100% of institutional investors participating, according to Peter Moses, country director at Citi, which managed the restructuring.
Category: Corporate & Sovereign Strategy
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Vale Aussie Unit Denies ‘Default’ Accusation
Aquila Resources is accusing Vale’s Australian coal unit Bowen Central Coal (BCC) of not complying with infrastructure agreements related to the Eagle Downs Hard Coking Coal joint venture project, which is worth about $900m. In a statement filed in the local market, Aquila says the JV had agreed to ship 4m metric tons of coal through Abbotts Point port, but that BCC does not support the entry into infrastructure arrangements. Aquila Coal considers this to be a default under the joint venture agreement and has issued BCC with a default notice under the joint venture agreement. BCC says it does not agree that it is in default, as it prefers to ship coal from Eagle Downs through the Dalrymple port, according to a company statement filed with the Australian stock exchange.
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Quintella Assumes Global Role at CS
Antonio Quintella, CEO of Credit Suisse’s Brazil business and head of the Sao Paulo-based investment bank, has been appointed co-head of a new EM council made up of 15-17 bankers, many of whom are heads of business lines, regions or one of 7 EM regions that include Mexico, Brazil, Middle East, Russia, India China and Indonesia. Quintella has been selected as a permanent co-head of the council alongside Russia CEO Fawzi Kyriakos-Saad. “The council will seek to increase transaction flows not only into EM but between EM countries,” Quintella tells LatinFinance, noting a pickup in south to south investment flows. He adds another main purpose will be to better connect the bank’s internal EM staff across regions, and help local market clients access the bank’s global EM network. Quintella will remain CEO of Brazil, but relinquishes stewardship of the investment bank. Jose Olympio, head of corporate finance for Brazil and Marcelo Kayath, head of equities, will become co-heads of the investment bank.
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ISA Focuses on Diversification
Luis Fernando Alarcon, CEO of Colombia-based ISA is focused on diversifying away from energy transmission. “We have determined that we want to grow in other areas such as highway concessions and gas pipelines, among others,” he tells LatinFinance. “By 2016, we want 20% of our income to come from these other sectors,” Alarcon adds. ISA is in the process of finalizing the acquisition of a 60% stake in Cintra Chile from Spain’s Grupo Ferrovial for about $300m. It plans to exercise an option to buy the remaining 40%. “Cintra expects to finish its Ruta 5 project in Chile in a few months and we want to have the support of [Grupo Ferrovial] until that project is completed. After that we would begin working on acquiring the remaining stake,” Alarcon explains. ISA recently won Autopista de la Montana, 40-year concession which will require an investment of $2.5bn. Alarcon expects construction to begin in 2011. Elsewhere, ISA is developing fiber optic networks through its Intenexa unit, which already operates in Ecuador, Peru and Colombia. “We aspire to connect all of South America and Central America,” Alarcon says. The diversification strategy does not entail divesting electricity transmission, the executive notes. ISA is working on an environmental impact study to build and operate an electrical interconnection line between Colombia and Panama, a project it will develop with joint venture partner Etesa of Panama. BBVA is helping ISA secure financing for the project. Alarcon says ISA has already received expressions of interest from multilaterals including the IDB, CAF and IFC, as well as private banks.
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Ausol Extends Restructuring Offer
Autopsitas del Sol has extended its debt exchange offer to March 3 from February 10, and notes it has received acceptance from holders of $98m, or 31.9% of its total $306m debt. The toll-road operator is looking to extend maturities in the restructuring, offering holders of 3.50% of 2014 bonds (which step up to 5.0% this year) and holders of 11.5% of 2017 bonds the choice of new 2015 peso denominated floating-rate bonds, new 2020 step-up notes, both in a par exchange, or $400 cash for $1,000 principal. Accepting holders choosing new bonds then also have the additional option of exchanging new notes obtained at par for new 2017 bonds at a 10% discount. Barclays is managing the process.
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Risk Spike Hammers Brazil Issues
A global markets rout amid fears of default in Greece, Portugal and Spain is beginning to infect LatAm. After a botched Brazil IPO this week, a pair of debt issues appears to have run into trouble. A 2015 bond transaction from BES Investimento do Brasil has been postponed, according to investors following it. Baa2/BBB minus BESI was set to finish a US and European roadshow Thursday marketing a deal expected at $350m. Deutsche Bank, Espirito Santo and Standard Bank were running it. Worries across global markets also resulted in radio silence on a debut $200m 2015 bond from grower Vanguarda do Brasil, which had been roadshowing through Tuesday. Officials familiar with the B3/B minus transaction say the sale is still being negotiated with investors, and that as of late Thursday, there was still a plan to launch. Morgan Stanley is leading Vanguarda. Also hoping to do bond deals from Brazil are Marfrig (B1/B+) and Independencia. However, risk aversion is rising and LatAm issuers need to move swiftly to avoid being caught in the crosshairs. “Latin America is vulnerable to a crisis in Southern Europe or any other emerging market,” says a veteran EM trader. He adds that hedge fund purchases of Eurozone CDS, combined with short selling of developed world stocks, has the ability to seriously destabilize LatAm. “The world has gotten much smaller, and sovereign debt is susceptible to vulture investor tactics,” he adds. The Bovespa ended almost 5% lower on the day and Mexico equity fell more than 2%.
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Brazil Follow-On Comes at Steep Discount
Brazil small-cap homebuilder Inpar has raised BRL280m through the sale of 87.5m shares at BRL3.20. That the deal was priced at all is an encouraging sign, and investors who participated could end up benefiting from the substantial haircut demanded of the issuer and potential post-deal recovery of the share price. The stock was clobbered in the sessions leading up yesterday’s pricing, says a buysider who did not participate. At BRL3.20, the shares were offered at a 4.5% discount to Tuesday’s close and 18% below the recent January 19 high of BRL3.91. Competing for investor attention with PDG Realty, a much larger and more widely followed homebuilder that is slated to price its follow-on Thursday, may also have contributed to the deal’s difficulty in pricing. Credit Suisse, Bradesco BBI, HSBC and Santander led Inpar’s follow-on.
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Batista Shipping Unit Edges to Float
OSX, the Brazilian offshore shipping company being formed by Eike Batista, is a step closer to going public. The company filed its charter with the CVM late Friday detailing rules surrounding capital and governance structure. It says it has been authorized by the board to raise equity capital of up to BRL10bn through the placement of ordinary shares. It does not state whether this would be done on the public market or with private investors. However, OSX has been widely cited as one of the main candidates for an IPO in 2010. In its charter, OSX says its goal is to be involved in shipbuilding as well as providing equipment and services for offshore oil and gas. Among the first steps for the company is to build a shipyard in the port of Biguacu, in the state of Santa Catarina, where OSX has already acquired most of the necessary development rights. The facility is expected to command an investment of $500m-$600m. The goal is to produce standardized vessels for exploration of Brazil’s offshore fields and lease them to Batista’s oil and gas company OSX, as well as to Petrobras and others in Brazil. Batista says much of the financing for the shipyard itself may come from the BNDES, due to alignment with Brazil’s plan to develop its natural resources. He also notes talks with Singaporean and Korean builders to have them build and develop the facility in exchange for a minority investment in the company. Batista’s recent focus on OSX has drawn attention away from an earlier plan of his to take public EBX, the holding company for all of his infrastructure companies, say executives close to Batista. The executive originally planned to raise up to $10bn on the stock market to capitalize the holding company and reduce subsidiaries’ reliance on the whims of the capital markets. As market conditions deteriorated, the plan became to raise a similar amount of cash via a giant infrastructure private equity fund. That idea seemed to fall on deaf ears with potential investors and sov
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StanChart Names Private Banking Head
Standard Chartered has named John Leto president and CEO of its Americas private banking unit, it says. Leto is based in Miami and reports to David Stileman, CEO Americas and Marianne Hay, head of private banking for Europe, Americas and MENA. He joins from a startup private bank Alpha Capital Financial, where he was a partner, after holding different positions at Citi, including Chief administrative officer at its private bank. Leto replaces Diego Folino, who will move to another role at Standard Chartered that has not been announced yet.
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JBS Sticks to US IPO Plans: Reports
JBS, the Brazilian meatpacker, plans to continue with plans to issue shares in US, though the timing of the deal has been delayed, CEO Joesley Batista told local news outlets in Sao Paulo Monday. The executive says the offering, expected to be worth $2bn, won’t occur until after the company release Q4 results and may occur during H1. The original timeline involved a placement in January 2010. JPMorgan advised JBS in its acquisition of Bertin in Brazil and Rothschild and Rabo advised it on its US acquisition of Pilgrim’s Pride in Q4 2010. JBS is raising equity in the US through an IPO and in Brazil through a private share placement to help finance the deals and capitalize the companies. JBS also announced Thursday it has launched a tender offer for its 9.375% 2011 bonds, of which there are $275m outstanding. The company’s string of acquisitions last year triggered change of control clauses, forcing JBS to buy back the bonds. The buyback period goes through March 1. JBS was unavailable for comment.