Mexico’s finance ministry plans to announce this week a program to refinance debt of some states. Specifics should emerge this week, but Banobras will participate by offering guarantees. “Though state debt is not a general problem, at about 2.5% of GDP, there are some governments that need to undergo refinancing operations to improve their financial positions,” it says.
Category: Loans
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Nemak Poised to Fund Upsized Loan
Mexican car parts manufacturer Tendedora Nemak is poised to fund an upsized $1.145bn dual-tranche loan on Thursday after luring some 21 banks into the transaction. The loan is part of a refinancing of restructured debt that will allow the company to free up collateral, lower funding costs and loosen covenants as it prepares for more growth in the car sector. The deal was initially launched in early July as a $1bn 5-year amortizing term loan via leads BBVA, Citi, HSBC and Santander, but has since seen the addition of a $145m revolver that is for working capital and provides Nemak with some operating flexibility without increasing leverage. The 5-year amortizer is tied to a leverage grid and out of the box pays Libor +300bp for over 3x, and drops to 275bp for leverage between 2.5x-3x, to 250bp for 2x-2.5x and to 225bp below 2x. Covenant thresholds have been set at 3.75x leverage, but will be lowered to 3.50x in March. The loan starts amortizing in month 9 with 2 initial payments of $25m growing progressively larger throughout the life of the loan with half being paid during the last year, making for a 4-year average life. When the loan was launched into general syndication, leads offered $25m and $50m tickets for arranger and co-arranger positions with 30bp and 50bp upfront fees, respectively. Leads also presented banks with a $75m MLA ticket for 75bp, but also encouraged them to come in as sub-underwriters to receive over 75bp if they made larger commitments. At these levels ING, RBS and Bank of Tokyo were heard signing up. Excluding the 4 leads, 17 banks have committed to the term loan. The revolver, meanwhile, is available for three years and if utilized pays the same applicable margins as the term loan but with tenors of 6 months or less. If the borrower doesn’t draw on the revolver it pays between 30%-40% of the applicable margin. While some bankers had initially considered pricing aggressive for a company that had struggled when the US economy slid into a recess
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Nutresa Seeks Further Acquisitions
Colombian food company Nutresa is now fully capitalized for this year after its recent COP522.5bn ($299m) equity follow-on, but could come to the markets again once it finds other acquisition targets, the company’s CFO Ana Maria Giraldo tells LatinFinance. Giraldo points out that with a net-debt-to-Ebitda ratio of just 1x, Nutresa’s leverage is still low. “We have low debt levels and this allows us to look at acquisitions,” she says. The company is looking to spend anywhere between $500m-$600m on its next target and the recent share issue has helped prepare the ground for any potential purchases. Target countries and regions are Peru, Central America, the Caribbean and the US, and Nutresa is now focusing its efforts on the cold cut sector after having bought US biscuit maker Lil’ Dutch Maid in 2010 and ice-cream company Helados Bon in the Dominican Republic this year. Depending on the size of the acquisition, the company may try its luck with a level 3 ADR, Giraldo says. Though Giraldo doesn’t discount international bond issues, she says there are more cost effective sources in the local markets and through bi-lateral loans with domestic banks which are still liquid. “Banks are offering very competitive financing,” she adds. Raising capital in other LatAm bond markets is also a possibility. Indeed, Nutresa was one of the first companies to tap this type of funding source when in 2009 it placed $40m equivalent of 10-year notes among Peruvian institutional investors, paying Libor+1.80%. It also raised local financing in Costa Rica after buying Galletas Pozuelo in 2006, and took out an $85m bi-lateral loan with US boutique Stephens when it acquired Lil’ Dutch Maid.
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Casa Saba Refinances Loan
Mexico’s Grupo Casa Saba has refinanced a MXP7.72bn ($628m) bridge loan, rolling it over into a two tranche term loan, it says. The pharmaceuticals distributor took out the loan last year to fund the $498m purchase of a controlling stake in Chilean drug store Farmacias Ahumada. A 7-year portion of the transaction pays TIIE+481bp, and a shorter tranche, for which it does not specify the tenor, pays TIIE+225bp. Banorte and HSBC managed.
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MMX Retains Advisors for Jumbo Loan
MMX, the mining unit of Brazilian magnate Eike Batista’s business empire, will seek to raise $1.8bn in the loan market later this year to fund the expansion of its Serra Azul project. The company has retained Itau and WestLB as debt advisors with preliminary discussion about the transaction already under way. The structure is expected to take the form of a commercial tranche alongside financing from export credit agencies (ECAs). MMX shareholders China’s Wisco and Korea’s SK Networks should be able to leverage relationships with Asian agencies, says a person familiar with the process. Such stakeholders have already put up some equity to cover the cost of the $2.3bn project, he adds. A 10-year maturity seems reasonable as “mining and iron ore is a high margin business these days and it does not require longer tenors,” he adds.
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Some Banks Not Ready for OSX Risk
Some banks are giving OSX’s $850m 12-year loan a wide berth even after a recent upward flex. This comes as European banks feel the sting of the euro-zone debt crisis not only through higher funding costs, but also in terms of risk aversion. The oil service company, controlled by Brazilian magnate Eike Batista, has yet to develop a track record and hence is seen as less attractive than other such Brazilian companies, say bankers. “It is really an issue of the borrower. We don’t have a relationship with them,” said one banker at a European financial institution. But other non-European institutions are taking a similar view. “The group has been successful in raising money, which is an accomplishment. (But) we would like to see more of track record,” said a banker at an Asian institution. Just recently margins were flexed to Libor+425bp from 375bp for the pre-construction period, and to 400bp from 360bp for post-construction, according to a banker looking at the trade. ING and Santander are lead arrangers.
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GrupoSura Mandates On FO
Colombia’s Grupo de Inversiones Suramericana (GrupoSura) has selected BBVA, Deutsche Bank, HSBC, JPMorgan, Santander and UBS to lead the international tranche of its up to $2.1bn equity follow-on offering, Andres Bernal Correa, the company’s vice president of investment and finance, tells LatinFinance. The same international institutions have provided $1.65bn in bridge loans which can be disbursed anytime over a 1-year period and will carry a tenor of 1-2 years. The move is part of a financing plan to cover the cost of the recently agreed EUR2.615bn ($3.76bn) acquisition of ING’s LatAm pension fund and insurance assets. The company is targeting a $700m size for the foreign follow-on and a larger $1.4bn-equivalent to be placed among locals via Bancolombia, which along with Banco de Bogota and Davivienda has also given GrupoSura up to $1bn in bridge financing. UBS and Bancolombia acted advisors to GrupoSura on the acquisition. Proceeds from the credit lines are slated only to fund the acquisition, but hopes are that the company will not have to tap the bridge, Bernal says. Equity financing is seen as way to the ease pressure being exerted by the ratings agencies like S&P, which placed the company’s BBB minus rating on creditwatch after noting that incremental indebtedness from the acquisition could impact GrupoSura’s credit profile. The FO is expected to be launched in October, but with bolsas across the region tumbling 5% or more Monday after S&P took away the US’s triple A credit rating over the weekend, questions remain about the ability of any company to tap equity markets, at least in the short-term. “We hope that markets will calm down in a few weeks…and that it will not affect (LatAm) as much as others,” Bernal adds. The amount of funding available to the company through various sources exceeds the amount required for the acquisition, notes Bernal, leaving some breathing space should other markets close. These include about $500m of cash on hand. Ideally, the c
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EPM Upsizes Debut Loan
Colombian quasi-sovereign utility Empresas Publicas de Medellin (EPM) has upsized an IFC-supported A/B loan to $349m after receiving commitment letters from 14 commercial banks, the company’s CFO Oscar Herrera tells LatinFinance. The A loan remains with a $25m size, but the B portion has increased to $324m from $250m. The deal marks EPM’s first foray into the syndicated loan market as it looks to diversify its funding sources. The B loan pays Libor+187.5bp on a 5-year tranche and +215bp on a 7-year, both with 75bp commitment fees. For MLA tickets of $50m, participants receive upfront fees of 100bp on the 5-year and 130bp on the 7-year, 80bp and 105bp respectively for $25m tickets, 65bp and 85bp for $15m and 50bp and 65bp for $5m. The loan is rated Aa3 by Moody’s and BBB minus by Fitch. Proceeds will go towards investments in energy and water distribution.
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Pemex Amendment Nears Completion
Pemex has seen some banks fall by the wayside as it looks to amend a dual-tranche loan with tighter financing terms, but the transaction is on track to achieving its $3.25bn size, say bankers. Inbursa, the financial institution controlled by Mexican billionaire Carlos Slim, is heard to be one of the banks that have declined to participate. “They are price sensitive so for them it didn’t work and they declined,” says one banker. Banks that bought the loan in the secondary market were also expected to turn down the Mexican state-owned oil company’s offer. “The original price didn’t make sense, so that is why they bought it in the secondary,” the banker explains. That said, the amendment is expected to get final approval sometime this month, and the company is heard asking banks to roll over interest payments on a weekly basis until the new pricing has become effective. Pemex launched the refinancing of its $3.25bn dual-tranche loan in July, with the aim of reducing margins by another 50bp. It closed the original transaction in December, but had a change of heart after seeing telecom America Movil lock in just 50bp over Libor on a $2bn 3.5-year loan in April. After paying Libor+125bp on its $1.25bn 3-year revolver and plus 150bp on a $2bn 5-year term loan, Pemex was heard to be less than satisfied with the spreads it had achieved just four months earlier. The company intends to reduce the margin on the revolver to Libor+75bp, while also cutting the term loan to Libor+100bp. Commitments fees will also fall to 25bp from 45bp. Banks will be paid a 25bp amendment for rolling over existing debt, and 35bp for any new money. Commitments were due August 3 with the closing previously scheduled for August 5. Participants on the original deal were Deutsche, Goldman Sachs, Intesa Sanpaolo, Credit Suisse, Societe Generale, Bayern LB, JP Morgan, SMBC, Bank of Tokyo-Mitsubishi, Mizuho, Morgan Stanley, Banco Santander, Natixis, EDC, DZ Bank, Bank of New York and Scotia. Sumitomo came
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Elecnor Closes Brazil Project Financing
Spanish infrastructure company Elecnor has obtained a BRL445m ($283m) financing package from BNDES to develop new wind power projects through its Enerfin subsidiary. The loan has a 16 year tenor and will go to finance three parks with a combined total of 150MW in generation capacity in the state of Rio Grande do Sul.