Credit Suisse has held on to the top spot for LatAm investment banking advisory fees, according to Dealogic. The bank generated $124m in revenue for a 14.9% share of the wallet year to June 22, beating out Itau with $115m and 11.6% and JPMorgan with $113m and 11.4%. The top three maintain their positions from the year before, while HSBC makes an appearance in the ninth spot with $35m in fees after not being on the list last year. Goldman Sachs failed to be among the top 10, despite registering at number 9 this time last year. Morgan Stanley also joined the ranks at the seventh spot with $45m in fees. Fees are significantly higher over last year, up to $991m from $805m for the corresponding period in 2010. Credit Suisse also took the most in M&A revenue with $48m, despite listing third for DCM revenue with $34m and fifth in ECM revenue with $35m. JPMorgan came in first in DCM revenue with $36m in fees, while Itau took the most in ECM advisory fees with $68m.
Category: Loans
EPM Looks for Diversity with Loan
A need to diversify funding sources has Colombian quasi-sovereign utility Empresas Publicas de Medellin (EPM) turning to the loan market for the first time, CFO Oscar Herrera tells LatinFinance. “This is a new source of funding for us. In the past year we have had interest from many banks wanting to do this type of transaction,” he adds. The company wants to raise $275m through an A/B loan structure. “This is a good moment, there is a lot of liquidity and good financial conditions,” Herrera says. Commitments are due July 8 for the $250m 5 and 7-year B portion. The IFC $25m A structure makes the 7-year portion possible, Herrera confirms. There is interest from about 25 banks, including a few regional lenders, and Herrera says the transaction could be upsized to the $349m cap established for the project. Bankers echo such sentiments, saying that an upsize is a very real possibility thanks to a strong interest in Colombian paper and the need to diversify portfolios. The $250m 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- by Fitch. Proceeds will go towards investments in energy and water distribution.
Espirito Santo Gets IDB Loan
Banco Espirito Santo will receive a $50m loan from the IDB to lend to infrastructure, renewable energy and energy efficiency projects in LatAm and the Caribbean. The transaction will also mobilize approximately $80m from B-lenders, depending on market conditions. Proceeds will support the production of fossil fuel alternatives and greenhouse gas emission reduction opportunities. The loan has a 7-year tenor with an option to extend for another 3 years. The project will be managed by Espirito Santo’s New York branch.
Gruma Concludes Refinancing
Mexico’s Gruma announced the conclusion of a debt refinancing Wednesday with the prepayment of an MXP3.367bn Bancomext loan that had cost it TIIE+6.21%. The idea was to extend tenors and lower financing costs, the company says. The wheat and corn producer refinanced the loan through three new facilities tied to a leverage grid. These include a 7-year, MXP1.2bn syndicated bank loan via BBVA Bancomer that pays TIIE+137.5bp-225bp, a 5-year $50m revolving credit facility through Rabobank paying Libor+150bp-225bp, and a new MXP600m 7-year loan from Bancomext paying TIIE+137.5bp-225bp. The company also announced it has refinanced a $200m revolving line of credit with BAML paying a floating rate of Libor+137.5bp-200bp. The transaction will save the company $72m.
Mexichem Looking for up to $3bn
Mexichem is looking for up to $3bn through a 3-5 year revolving loan facility as it searches for acquisition targets in the chlorine, fluorine and high-end plastics sectors. Although the revolver would be used to finance potential acquisitions, the funding is not deal driven, says a Mexico-based investment banker. “It’s a nice to have for them,” he adds. The chemical conglomerate is looking at 4-5 different targets, he adds, and is planning to vertically integrate three main sectors. In the chlorine supply chain, Mexichem is hoping to acquire upstream assets to reduce costs for its production of PVC and plastics. In the fluorine chain, it has already completed some acquisitions as part of a strategy to buy more downstream refrigeration assets. The banker says it is also looking for targets in the high performance plastics sector, in an effort to sell to the aerospace and health care industries. Mexichem acquired US-based plastic compounding business AlphaGary for $300m in cash last year. CFO Armando Vallejo Gomez told LatinFinance earlier this year that the company plans to keep acquiring companies until it becomes a world leader in the products it sells. As part of its expansion plans, Mexichem recently acquired a fluorocarbon producer in Japan for an undisclosed amount from Showa Denko. The plant generates 10,000 tons of refrigeration gas per year. The company says the acquisition represents a significant step in its plans to accelerate its growth in the refrigeration sector, making it the only producer of R-125 refrigeration gas outside of China.
Size, Structure Critical to RE Financing
The size and structure of renewable energy projects in LatAm remain critical to securing adequate project financing, according to bankers in the industry. Despite increasing opportunities in an electricity sector that is tracking GDP growth, investors remain discerning on the number and type of deals they are backing. “Projects are being financed on a selective basis and on a club basis,” says Emilio Fabbrizzi, senior vice president at Banco WestLB do Brasil in the Global Energy Group. “The role of MLAs is very important,” he adds, identifying multilateral IDB as being particularly active and aggressive in bringing in commercial banks to support renewable energy projects. Although bond investors remain unwilling to take on the construction risk inherent in financing uncompleted projects, Fabbrizzi says the bond market is instrumental for refinancing. “A lot of projects are getting to the stage where they can be refinanced,” he adds. Isaac Deutsche, general manager at the LatAm department of Sumitomo Mitsui, says the Mexican wind market is particularly attractive, as it has been able to make use of existing CFE power purchase agreements (PPAs). “The underlying structure is something the market is already very comfortable with,” he says. “The offtake [agreement] is very well known.” Having contracted purchase agreements is critical for projects to secure funding, he says. Size also remains an issue. Larger international lenders want to get involved in more sizeable deals, but many renewable energy projects are often small. “Big institutions want to do deals,” says John Paul Moscarella, senior managing director and principal at Emerging Energy & Environment. “We do have an issue with size. Scale remains a problem.” All three spoke at the LAC-CORE Renewable Energy Finance Briefing in New York.
Usiminas Joins Rush For Revolvers
Brazil’s Usiminas is the latest LatAm borrower to sound out loan bankers on a possible revolver after seeing how miner Vale locked in ultra-tight pricing on a similar structure earlier this year, says a New York-based banker familiar with the company. The steel concern is seeking up to $1bn through a 5-year tenor, while chemical firms Braskem and Mexichem are also considering revolvers as a way to obtain cheap liquidity, bankers say. “Following the recent Vale transaction a lot of our clients are looking to go to market with a revolver,” says a New York-based banker at a European financial institution. This comes as Mexican state-controlled entities Pemex and CFE seek better terms by refinancing facilities taken out before Vale established its new pricing benchmark. At the current applicable margin, Vale is paying 65bp over Libor on its revolver for a draw-down of up to 33%, 80bp for between 33% and 66%, and 95bp after that. The region’s borrowers clearly see an opportunity in a bank market where a larger number of financial institutions are chasing relatively few assets. So far lenders have been pliable on pricing, but concerns over potential market fallout from Greece’s debt problems and expectations of stricter regulatory capital requirements in the US may eventually create some resistance. “It seems strange that there is talk about repricings with all that is happening in Europe,” says the banker at the European financial institution. “But the market in LatAm has been so competitive that I haven’t seen much of an impact.” Still, voices of protest have been growing louder of late particularly concerning repricings just months after a deal has closed. “If they want to increase the maturity then it will be a much longer process and it will be much harder to get approval from credit committees,” adds another banker.
Itau to Refinance at Wider Spread
Itau-Unibanco launched a new $500m 3-year loan in Asia Monday offering banks a margin of Libor+120bp and upfront fees ranging between 30bp-60bp depending on ticket sizes. Proceeds are going toward refinancing an existing $400m facility taken out in 2008 through leads BNP Paribas and Unicredit. But that loan paid just Libor plus 95bp as it was secured before the global financial crisis sent spreads wider. The Brazilian lender has also scheduled bank meetings in New York for June 29. BNP Paribas, HSBC and Mizuho are acting as underwriters and global coordinators, though some other banks may also join at this level.
Rare EPM Loan Lures Banks
Colombian energy company, Empresas Publicas de Medellin (EPM) is generating considerable interest for its new $275m A/B loan after it held bank meetings in New York Monday to announce the deal’s terms. The borrower’s rarity value and its quasi-sovereign status are luring international financial institutions keen to participate in what is EPM’s debut syndicated loan. The $250m 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. “There are tickets from $50m to $5m so there is room for everyone, and there is also the option to pick how much banks want from the 5-year and the 7-year tranche,” said one banker. Now that Colombia holds two investment-grade ratings, EPM’s quasi-sovereign status is particularly appealing to loan bankers who haven’t seen a cross-border bank transaction from this country for quite sometime. Given the interest in the transaction, bankers would not be surprised if size grew to the $349m cap set earlier by the company. “Banks will be very underweight Colombia, so it will probably be significantly oversubscribed,” the banker says. The A/B loan structure and the support of the IFC, which is participating with $25m, are seen as necessary particularly for the longer 7-year tenor. The deadline for proposals is July 8. The loan is rated AA3 by Moody’s and BBB- by Fitch. Proceeds will go towards energy and water distribution. EPM in January raised COP1.25trn ($679m) through a global 2021 pricing it to yield 8.5%. The IFC is heard running the syndication, with no banks yet officially mandated on the B loan.
Bankers Await Votorantim Mandate
Bankers were still awaiting a mandate decision last week from Brazil’s Grupo Votorantim on a $2.65bn dual-tranche loan facility after submitting proposals ahead of the June 9 deadline. Terms have yet to be determined, but more details about the structure have emerged. Votorantim is looking for a $1.5bn 5-year revolving credit facility and an export prepayment facility comprising 2018, 2019 and 2020 tranches for a total of $1.15bn, according to the company. The revolver will replace an existing $400m facility and the export prepayment loan will be used to prepay export prepayment agreements. Bankers expect aggressive pricing, given the success of the Vale and America Movil transactions. America Movil priced a $4bn dual-tranche deal in April, made up of a $2bn 3.5-year tranche, priced at Libor+50bp and a $2bn EUR equivalent 5-year tranche priced at Libor + 60bp. Vale also closed its syndicated loan in April, a $3bn 5-year revolver, priced at L+60bp.