Category: Economy & Policy

Mexican restaurant operator Alsea is looking to issue up to MXP1bn of 5-year bonds in September, according to a regulatory filing. The notes will yield a spread over TIIE, with Santander and BBVA Bancomer as joint leads on the deal. The AA rated issuer sold MXP400m of 3-year bonds in March via HSBC, paying 175bp over TIIE.

Pochteca Materias Primas y Pochteca Papel, a Mexican paper, solvent and polymer producer on Friday issued MXP350m in 4-year bonds at a spread of TIIE plus 180bp. The bonds are rated AAA on a national scale. It is the company’s first public debt issuance, according to a banker at bookrunner IXE. Fund managers, private banks and insurance companies were the main investors. Proceeds of the transaction will be used to refinance more expensive debt and for working capital. The company is looking to grow its business and to make acquisitions in the future, says a banker at the lead.

Leasing Bancolombia has issued COP220bn ($121m) in local bonds. The issue was made in 3 tranches. A 3-year COP78.4bn piece pays 1.20% over DTF, a 5-year COP53.6bn pays a fixed rate of 7.50% and a 10-year COP88.0bn piece pays a fixed rate of 8.14%. Total demand of the AAA rated notes soared to COP423.5bn. Valores Bancolombia handled the sale.

Itau says it has “mixed feelings” on Brazil-based Heringer’s plans to issue BRL228m in 2014 non-convertible debentures paying CDI plus 4.5%. Proceeds will be used to pay debt maturing November 30. “While increasing debt duration is always a positive, the move into BRL-indexed debt reduces the company’s natural hedge against FX fluctuations from its operations,” the bank says. “We believe this could be good news in the short term, assuming the Brazilian government manages to prevent any major appreciation of the real, yet there is always a risk, given the potential dollar flows into the country. In the longer term, though, we believe the FX risk increases substantially,” it adds.

Mexican maritime logistics provider TMM has raised MXP10.5bn through an ABS Thursday. The 2030 bonds, rated AA on a national scale, pay a spread of TIIE plus 245bp and were 20% oversubscribed, says a banker at the lead, Value Casa de Bolsa. The bonds will be used to replace MXP9bn in 3 outstanding service contract receivable securitizations. They will also be used to refinance smaller bank debt and working capital. In the largest and most recent of the 3 prior deals, TMM sold MXP4.39bn in 2028 bonds at TIIE plus 219bp in July 2008. TMM has a fleet of boats servicing offshore oil rigs, in addition to other transportation and port operation business lines.

Telefonica has raised MXP6bn through the sale of 4 and 10-year bonds. The Telefonica Finanzas Mexico unit priced MXP4bn in 2014 floaters at TIIE plus 55bp. It also did MXP2bn in 2020 fixed rate notes at 8.07% or Mbonos plus 134bp. Some investors say the spread for the 4-year tranche in particular was lower than expected, but that lack of domestic corporate supply meant both pieces were oversubscribed. Demand was 1.3x for the fixed tranche and 1.4x for the floater, according to bankers on the deal. “Pricing was too tight as it does not take into consideration the risk relating to the Vivo acquisition,” says a major Mexico-based investor. Both tranches priced in the middle of guidance, which was TIIE plus 45bp-65bp on the 2014 floater and 125bp-145bp over Mbonos for the 2020. “We were hoping to price at the tight end of guidance but this was not possible due to the recent international volatility that has affected the Mexican market,” says a banker at one of the leads. Some local portfolio managers say Mbonos plus 160bp-180bp and TIIE plus 100bp would have been more appropriate given the M&A risk. “The severe shortage of names in the domestic corporate space meant they were able to get the deal away at this level,” adds the Mexico-based investor. Mexican miner Penoles had been due to issue MXP6bn of bonds this month, though it pulled the transaction and is said to be looking instead at dollars. BBVA Bancomer, Santander and HSBC managed the Telefonica sale, rated AAA on a national scale. Proceeds are earmarked for debt refinancing. The transaction is the company’s first issuance in Mexico since 2006, when it raised MXP4.5bn in floaters due to mature in September.

Mexican food products maker Grupo Herdez is planning to raise MXP500m through the sale of domestic bonds. It plans to sell 2013 notes paying a spread to the TIIE benchmark. The issue remains to be rated. The producer of juices and canned vegetables, best known for its salsa, plans to use proceeds for general corporate purposes. Ixe is managing the sale.

Spain’s Telefonica has sweetened its offer for a 50% stake in Brasilcel to EUR7.15bn from EUR6.50bn and almost 74% of Portugal Telecom (PT) shareholders voted to accept the offer during a meeting yesterday, June 30, PT says. About 26% of shareholders voted against it, including the Portuguese government. The battle will move to court July 8, where it will be decided if the Portuguese government’s veto of the sale is in line with the laws of the European Union. The government holds 500 class A shares in PT. This is the second time Telefonica has increased its offer. Brasilcel, a joint venture between Telefonica and Portugal Telecom, holds 60% of Vivo Participacoes.

Shareholders of Portugal Telecom (PT) will decide tomorrow whether to accept Telefonica’s offer of acquiring half of a joint venture that holds Vivo Participacoes for about EUR6.5bn. A source close to Telefonica says it is likely that the new holders of the 8% of shares that Telefonica sold recently, worth about $800m based on market prices, will not likely be counted. “There are rumors that holders of those shares will not be allowed to vote,” the person says. A Spain-based analyst who covers Telefonica says the vote could go either way, as international investors hold about 64% of PT shares. Meanwhile, Telefonica insists that its offer is fair and does not say whether it will raise it. It already sweetened its deal early this month from an initial EUR5.7bn. Credit Suisse and UBS are advising Telefonica, while Bank of America is understood to be working in PT’s defense.