Category: Economy & Policy

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.

Mexico City’s government has priced a MXP2.0bn 2-tranche deal through guidance on MXP8.7bn in orders, according to a banker on the sale. A MXP900m 2015 tranche pays TIIE plus 14bp, while a MXP1.1bn 2020 portion pays a fixed 7.9%, or Mbonos plus 90bp. The securitization of tax revenues from the federal government had been expected to pay around TIIE plus 40bp and Mbonos plus 100bp. The bond were sold though a special trust using a structure in which the federal government is technically the issuer, since DF government is not permitted to sell bonds on its own. Proceeds are passed to DF in return for it pledging future proceeds from federal tax disbursements marked for the capital. Some 59 accounts, including Afores, mutual funds and insurance companies, participated, a banker on the deal says. The transaction is the first in a series of 3 similar deals from DF this year that will total MXP5.3bn. Proceeds will help fund public works, most notably construction of a new metro line. Deutsche Bank managed the sale, rated AAA on a national scale.

BNP Paribas Personal Finance’s issue of up to MXP800m in 3.5-year TIIE bonds has been moved to June 17, says a banker on the deal, blaming a delay in authorizations from the local regulator. The bond was initially expected to be issued on June 3. Scotia and BBVA Bancomer are managing the sale, rated AAA on a national scale. In September, the bank sold MXP1.3bn in 2012 notes at TIIE plus 130bp.

Spain’s Telefonica has improved its offer for Portugal Telecom’s (PT) 50% stake in Brasilcel, which holds a 60% stake in Vivo Participacoes, to EUR6.5bn from EUR5.7bn, says PT in a regulatory filing. PT says that the new offer, valid until June 30, still does not reflect the strategic value of the asset and will convene a shareholder meeting to decide on the offer. Credit Suisse and UBS are reportedly advising Telefonica, while Bank of America is understood to be working in PT’s defense.

Spain-based Telefonica will start a roadshow tomorrow to try and convince shareholders of Portugal Telecom (PT) to accept its offer for a stake in Vivo Participacoes, confirms a source close to the potential buyer. “Telefonica has always said that its offer made is a fair one. Now it will explain this to the shareholders,” he says. Telefonica on May 6 offered to acquire a 50% stake in Brasilcel, the controlling shareholder of Vivo Participacoes, for EUR5.7bn in cash. PT rejected the offer, saying Vivo is part of long-term growth plans. Brasilcel, which has 60% of Vivo, is 50% owned by Telefonica and 50% by PT. Telefonica says it will launch a tender offer to buy all Vivo shares not held by Brasilcel, for EUR600m. This represents 11.1% of all ordinary shares and 3.8% of Vivo’s total capital stock, says Telefonica. The price per common share is equivalent to 80% of the value attributed to each share owned by Brasilcel. The offer expires June 6. Credit Suisse has said it believes the offer is positive for Vivo shareholders by establishing a reference price that is 2.4x higher than market.

Colombian development bank Bancoldex has sold COP382.4bn ($188.8m) in local bonds. The issue was done in 3 series. A COP203.3bn 18-month piece pays 0.89% over DTF, a COP110.6bn 24-month piece pays 1.00% over DTF and a COP68.5 36-month piece pays 1.15% over DTF. Total demand was COP562.9bn, according to the issuer. The notes are rated AAA by BRC Investor Services and Duff & Phelps. Proceeds will be used for working capital. Bancoldex self-led the sale.

Colombian development bank Bancoldex is planning to issue COP1trn ($492m) in 5-year local bonds pegged to the DTF. The notes are rated AAA by BRC Investor Services and Duff & Phelps. Proceeds will be used for working capital. Bancoldex will lead the sale itself.