Category: Economy & Policy

Colombian oil producer Ecopetrol has raised COP2.2trn ($994m) via a 7-year loan from a group of local banks. An Ecopetrol official says the loan pays 400bp over DTF, which stood yesterday at 6.11%, according to the central bank. Inflation is around 5%, implying a relatively low real rate for long dated peso financing. “It’s a very good price [for the borrower],” says a banker close to the transaction. The banks on the facility were Banco de Bogota, Banco AV Villas, Banco Occidente, Banco Popular, Bancolombia, Banco de Credito, BBVA, Santander, Banco BCSC, Davivienda and Agrario. Proceeds are destined for the company’s capex plan, which includes $4bn in spending through 2010. State-owned Ecopetrol is also heard feeling out cross-border bond and loan markets for cash to complement peso funding. It was heard earlier this month requesting levels for 3, 5 and 7 year tenors for a syndicated loan facility of up to $500m in size, according to bankers. However, the 5 and 7-year maturities would command a rate unlikely to please the would-be borrower, say bankers, who suggest DCM as a more attractive alternative. Ecopetrol has said it is keen to launch its first public debt placement in over 10 years and investors are expected to jump on it. Shareholders have approved a plan to sell up to $4.1bn in bonds in international and local markets. At the end of 2008, Ecopetrol had $5bn in cash and zero financial debt. The BBB minus/BB+/Ba1 credit is looking to lever up its balance sheet to boost efficiency.

Cementos Argos is preparing a bond issue of up to COP640bn in the domestic markets. The Colombian cement producer is still arranging details, an official says, but it is eyeing fixed rate and DTF-linked tranches, in a sale likely coming within the next month. The issuer has the ability to place bonds at maturities ranging from 18 months to 20 years, he explains. Proceeds will refinance maturing debt. Bancolombia is managing the sale, likely to be joined by other bookrunners. Argos is rated AA+ by Duff & Phelps.

Colombian state-owned development finance agency Findeter has sold COP415.7bn ($170m) in credit deposit notes, on COP674.4bn in demand. It priced COP100bn in 18-month bonds at 0.8% over the DTF benchmark rate, COP96bn in 2011s at DTF plus 1%, COP71bn in 2012s at DTF plus 1.2%, and COP50bn in 2013s at DTF plus 1.32%. Also, a COP99bn 2014 tranche priced at 5.1% over the IPC inflation index. Correval managed the sale, rated AAA on a national scale. Today, Titularizadora Colombiana is expected to sell up to COP505.2bn in 10 and 15-year fixed and floating rate bonds backed by a portfolio of mortgages, also through Correval.

BBVA Bancomer is preparing to sell up to MXP3bn in local bonds as soon as next week, according to bank officials. The floating-rate notes will be priced against the 28-day TIIE benchmark rate, and have a maturity of up to two years. BBVA’s own capital markets unit is managing the transaction. The bank is rated AAA on a national scale.

Embotelladoras Arca has priced MXP1.4bn in13-month (392 day) bonds in the local market at the 28-day TIIE plus 155bp. Proceeds are being used to pay down maturing bank debt. Executives managing the sale claim no official guidance had been given, but pricing appears to have come wide of expectations. Bankers had largely expected the issue to come somewhere between the TIIE plus 80bp that fellow bottler Coca-Cola Femsa got on MXP2bn in 13-month bonds in January, and the 150bp that retailer Liverpool paid for MXP700m in12-month paper earlier this month. That it came 5bp wide of Liverpool was a surprise, says a banker away from the deal who acknowledges it is very difficult to predict pricing right now. It is worth noting, however, that up to 50% of the KOF transaction was designated for the underwriters’ retail clients, whereas Arca was sold mostly to institutions. Arca plans to use proceeds to help repay MXP2.3bn in bank loans raised with Inbursa and BBVA that carry 11.5% interest due in April and November 2009, which are also managing the new issue. Demand reached just over MXP2bn, according to bankers managing the AAA sale, primarily from institutional investors.

Colombia’s Banco Davivienda has sold COP550bn ($222.7m) in local bonds. The bank offered COP360bn in floating-rate notes, including 2010 notes paying the DTF rate plus 110bp, 2011 notes at DTF plus 120bp, 2012s at 135bp over DTF, and 2016s at IPC plus 550bp. Davivienda also sold COP67.3bn in 2011 fixed-rate at 10.4% and COP123.4bn in 2019 fixed-rate bonds at 10.4%. Demand reached COP1.26trn, Davivienda says. Davivienda plans to support its lending with proceeds from the sale, rated AAA on a national scale. Correval managed the issue. The bonds are part of a broader program of COP1trn to be sold this year.

Coca-Cola Femsa has priced MXP2bn in 14-month bonds at 80bp over 28-day TIIE, according to bankers managing the transaction. Demand reached MXP3bn, according to a banker on the sale. This is big jolt versus Femsa’s last local issue, a May 2008 sale of MXP1.5bn in 2011 bonds that priced 2bp through TIIE. The 28-day TIIE was at 8.1% Wednesday, versus 7.9% last May. The bottler placed the maximum it had filed for, but decided against allocating part of the issue in fixed-rate bonds of up to 5 years. According to S&P, which rates the deal AAA on a national scale, the deal could have gone out as long as 2011. KOF plans to use proceeds to help repay 9.9% bonds maturing in July, and for general purposes. Banamex and HSBC managed the transaction, the first plain vanilla corporate of 2009 in the local Mexican bond market, according to Dealogic. The last AAA corporate was America Movil’s MXP3bn in 2013s at Cetes plus 55bp and MXP2.1bn in 2013 UDI-denominated notes at the Udibono plus 60bp.

GVT Holdings, the Brazilian telecom company, has secured BRL616m in funds from the BNDES. The average annual interest rate of the facility is equivalent to approximately 85% of CDI, or 11.37%, says GVT, which says the calculation is based on present day CDI and TJLP levels. The loan has an 8.5 year term and a grace period of 2.5 years for amortization of the principal with interest payments only, and additional 6 years of principal amortization and interest payments. The final payment is due June 2017. Of the total approved amount, BRL200m is to be disbursed by year-end with the remainder being fed to the company through 2011, according to GVT.

Mexico’s TIIE rate should adjust upward to reflect lack of liquidity and higher borrowing costs in local money markets, Credit Suisse says, having a negative implication on the TIIE swap curve. Unlike Libor rates, the 28-day TIIE has been “remarkably stable,” since 2007, keeping mostly within 40bp-50bp, the shop says. Credit Suisse finds that the benchmark – reached through a poll of 15 Mexican commercial banks – is starting to show a lack of correlation with other on and off-shore rates that suggest an adjustment is likely. TIIE was at 8.68% Tuesday.