Gerdau, the largest producer of long steel in the Americas, has appointed BNP Paribas, Santander, HSBC and Citi for its $1bn 3-year club deal, according to bankers with knowledge of the transaction. The deal is expected to be composed of two tranches of $500m each. The loan is for working capital purposes, and will replace other short-term bilateral loans. The first tranche be used by its US and Canada subsidiaries, with the second tranche to be used by its other subsidiaries. Gerdau has steel mills in Canada, the US, Argentina, Brazil, Chile, Colombia, Dominican Republic, Guatemala, Mexico, Peru, Uruguay, Venezuela, Spain and India.
Category: Loans
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Project Finance Loans Miss Expectations
Structured finance bankers say that while they had expected infrastructure projects to require project finance loans this year, no new loans are close to being launched. The dearth of proposals has bankers worried the project finance market could be heading into a dry period in the next few months. “The last 2 months provide a very gloomy forecast as there is some pitching going on, but nothing else in the project finance space,” says one syndicated loans banker, who adds that even activity in the corporate loans space is spotty. Vale has appointed bookrunners for a $3bn syndicated loan, while America Movil is looking at proposals for a $4bn loan and Gerdau has put out an RFP for a $1bn loan. “A lot of corporates are well financed, so there are not many deals, and any deals that do come to the market will be able to price tightly as there is not much volume and banks are hungry to use their balance sheet,” says one head of syndicated loans. Market participants add that while some banks will look to lead deals, despite tight pricing, it will be very difficult for banks to participate at a retail level, particularly for European banks seeing higher costs as a result of the sovereign debt crisis. The last project finance loan, a $250m A/B loan from the IFC to fund the 168MW Cheves hydropower plant in Peru, came in December.
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America Movil Pricing Expected Tight
Market participants expect the pricing of the America Movil $4bn syndicated loan to be tighter than the Vale loan. Banks that pitched for Vale and did not win are expected to bid aggressively for the America Movil mandate. “The market is very liquid and there is still a lack of assets,” says one syndicated loans banker. Another says that since Vale’s $3bn, 5-year syndicated loan is offering a spread of 65bp over Libor, pricing for the portion of the America Movil loan with a 5-year tenor could come between 50bp and 60bp over Libor, as it has a higher credit rating than Vale. America Movil’s credit rating is A minus and Vale’s is BBB+. America Movil is looking at proposals for a 3-year and a 5-year tenor for a revolver, either in USD or a combination of USD and EUR. It is expected to choose banks this month, with a transaction expected to be signed by April.
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Argentina Borrows from State-Run Bank
Argentina will borrow ARP8.4bn ($2bn) from state-run Banco de la Nacion Argentina. According to the Argentine government, the loan will pay a rate of 100bp over Badlar and amortize over 2 years beginning in January 2012.
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Concha y Toro Buying US Winery
Chilean winemaker Vina Concha y Toro says it is acquiring California’s Fetzer Vineyards and related assets from Brown-Forman, the company that produces Jack Daniels whiskey, for $238m. A Concha y Toro spokesman tells LatinFinance that to finance the deal, the company has obtained a $125m bridge loan from Deutsche Bank maturing 6 months after the deal closes in April. He does not disclose pricing of the loan. The company will likely issue a bond of no more than $200m to refinance the loan and for working capital. “We still don’t know where we will issue the bond or in what currency,” he says. The buyer will also use cash on hand and existing credit lines, the spokesman adds. Celfin says the price paid implies a multiple of 1.5x sales and 7.6x Ebitda. “We see the deal as a substantial move toward internationalization for Concha y Toro, taking a significant step into the US market,” Celfin says, adding that Fetzer is the eighth largest player in the US wine market. BCI Estudios says the deal is in line with Concha y Toro’s internationalization plans by expanding its presence in key markets and reaffirms the positive perspectives for the company. The acquisition includes 6 wine brands, 429 hectares of owned and leased vineyards in Mendocino County, California, cellars with capacity for 36m liters, 6m liters of inventories, and a bottling plant. Deutsche Bank acted as Concha y Toro’s financial advisor while Rabo Securities and Rothschild advised Brown-Forman, according to the Concha y Toro spokesman.
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America Movil Looking at Loan Proposals
America Movil has received the majority of the proposals for the $4bn syndicated loan or equivalent it is seeking and will start comparing them this week, Victor Mendez, corporate treasurer, tells LatinFinance. The deal will be a revolver with either a 3-year or 5-year tenor, either in USD or a combination of USD and EUR. Market participants say America Movil will wait to see how Vale’s syndicated loan is received before determining the price, as it is seen as a benchmark transaction. “It is an indicator to see what market conditions are like and what banks’ appetite is like, but it will not be a determinant in the pricing of our deal,” says Mendez. The loan is a back-up facility for future opportunities. The leads will be chosen in March, when the syndication process will take place, and the transaction is expected to be signed by April, says the corporate treasurer.
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Gerdau Looking for $1bn Loan
Gerdau, the largest producer of long steel in the Americas, has put out an RFP for a dual tranche, $1bn 3-year facility, according to bankers with knowledge of the transaction. Each tranche is expected to be for $500m. The loan is for working capital purposes, and will replace other short-term bilateral loans. The first tranche be used by its US and Canada subsidiaries, with the second tranche will be used by its other subsidiaries. Gerdau has steel mills in Canada, the US, Argentina, Brazil, Chile, Colombia, Dominican Republic, Guatemala, Mexico, Peru, Uruguay, Venezuela, Spain and India.
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Peruvian Port Operator Gets $85m Loan
Andino Investment Holding, a Peruvian port logistics, port agency and warehouse operator, has received a loan for $85m from Goldman Sachs. The use of proceeds is to repay debt and increase its stakes in its operating subsidiaries.
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Vale Loan Pricing Said to be Tight
Vale’s $3bn syndicated loan is offering a spread of 65bp over Libor, with fees of 15bp for utilization of up to 66% and 30bp for utilization above this, according to bankers with knowledge of the transaction. The loan is heard to be structured as a new 5-year revolver, for working capital purposes. Credit Agricole, JPMorgan, Mizuho and Natixis are joint leads on the deal. While market participants say the pricing is in line with loans for other international competitors, they say it is extremely tight considering the cost of funding for banks. “While it is possible to see the logic of the pricing if you look at the pricing of transactions by competitors, it is difficult to justify this pricing from a funding perspective, given the cost of funding for banks,” says one syndicated loans banker. Rio Tinto last year last year priced a 5-year revolver at 65bp over Libor, with utilization fees of 15bp for up to a third and 30bp for higher utilization.
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Barbados Gets IDB Loans
The IDB has approved 2 loans for Barbados, one for $30m and another for $10m. The 2 loans will be used to support sustainable energy technology acquisition and to enhance coastal zone management. Both loans are for a 25-year term, have 5-year grace periods and have variable interest rates based on Libor.