Banco Itau Chile is expected to launch next week a syndicated loan. Credit Agricole and BNP Paribas are heard running the transaction and a bank meeting is scheduled for November 3 in New York. A $150m senior unsecured term loan facility is expected by bankers not on the deal. It is unclear why the bank is funding itself in Chile.
Category: Loans
Posted inDaily Brief
Odebrecht Floats Hefty Drillship Bond
Use of the bond market for drillship financing appears set to grow, with Brazil’s Odebrecht targeting a $1.5bn 10-year, considerably larger than those financed so far this year. The Odebrecht Drilling Norbe VIII/IX unit will use proceeds to refinance debt related to the construction of 2 deepwater drillships operated by Odebrecht Oleo e Gas and holding 10-year contracts with Petrobras. The BBB/Baa3 amortizing deal has an 8.1-year average life and will be pitched to investors next week. Two teams will start in London and the US West Coast Monday, hit New York, continental Europe and Singapore before finishing in Boston and Hong Kong Friday. Santander, HSBC, Deutsche Bank, and Banco do Brasil are managing the sale. The notes are backed by intercompany loans granted to each drillship, according to Fitch. It notes that construction of the Norbe VIII and Norbe IX ships are 95.5% and 88.0% complete, respectively, and should be delivered in the first half of next year. Earlier this month, Brazil’s BBB/Baa3 Schahin Engenharia raised $270m in 2016 bonds to refinance debt on the operating Lancer drillship, paying a 5.85% yield.
Posted inDaily Brief
Venezuela, DR Snag IDB Loans
The IDB has approved a $700m loan to finance the modernization of the turbines of Venezuela’s Guri hydroelectric project, increasing power by 795MW. Venezuela will contribute a total of $609m in counterpart funds to the project, which will have a total cost around $1.3bn. The IDB loan is for 20 years, with a 6-year grace period and an interest rate based on Libor. Separately, the IDB has approved a $120m loan to the Dominican Republic to help enhance competitiveness. The IDB financing consists of a $110m loan with an amortization of 20 years, a grace period of 5 years and an interest rate based on Libor. The other $10m loan has an amortization of 15 years, a grace period of 5 years and an interest rate based on Libor. The multilateral does not comment on the loan spreads.
Posted inDaily Brief
Alfa Heard Bringing Acquisition Loan
Mexican conglomerate Alfa is understood to have mandated a syndicated loan to back the $600m purchase of Eastman Chemical assets in the US. A $600m 3-year bullet facility is expected to be syndicated next month. Credit Suisse and HSBC are heard as the leads on the deal that hits a LatAm bank market starved for assets and hungry for yield. The purchase of Eastman’s polyethylene terephthalate resins business and related assets and technology of its Performance Polymers segment was done by Alfa unit DAK Americas. BAML advised Eastman while HSBC is understood to have worked on the buyside. Fitch Wednesday downgraded Alfa sub Grupo Petrotemex to BB (stable) from BB+, including notes issued by DAK, amid fears over leverage incurred in the purchase. On a pro forma basis, Fitch estimates that Petrotemex’s total debt-to-Ebitda, considering 12 months of Eastman assets operations, could reach 3.3x in 2010 and gradually decrease. This compares negatively with a total debt-to- Ebitda ratio of 2.2x for the 12 months to June 30, and fall outside Fitch’s prior leverage estimation of 2.0x to 2.5x. Nonetheless, Fitch notes that the investment is strategic and positive for Petrotemex, and should strengthen its business position, as it gains PET market share in North America. “It should also bring potential synergies to Petrotemex’s operations, provide the company with access to new technologies and improve its vertical integration,” says Fitch.
Posted inDaily Brief
DomRep Gets IMF Disbursement
The IMF says it has completed a second and third review of the stand-by arrangement (SBA) with the Dominican Republic and approved a $249m disbursement. Up to now, total disbursements total about $688m. The SBA was initially approved on November 9 for a total of $1.7bn and the IMF says all benchmarks for the second and third reviews were met. The IMF says the 2011 budget envisages a consolidated fiscal deficit of 3% of GDP, a 1% drop, to be achieved through a reduction in indiscriminate electricity subsidies and a strengthening of tax collections by rationalizing tax exemptions and improving tax administration, targets that are in line with the original program.
Posted inDaily Brief
Lenders Await Pemex Allocations
Bankers are keenly awaiting this week’s allocations on a Pemex $3.25bn dual-tranche loan. It has apparently received over $4bn worth of commitments from 15 banks, not including the leads, a fact that raises some eyebrows. “They are asking for pretty big tickets for tight pricing,” says a banker not on the deal. “It’s not that far from where banks have their own funding costs,” he adds. The deadline for commitments was 2 weeks ago. Sizeable tickets received include $250m from Sumitomo across both tranches, $150m from Intesa on the 5 year tranche, and $75m from EDC to the 3 year, according to market participants. The 3 year tranche is a $1.25bn revolver to replace a 2007 loan that matured in September that had been priced at 25bp+Libor, for which it is offering 125bp over Libor. Fees for participation in the range from 25bp-60bp for $100m, $75m, $50m and $35m tickets. Bookrunners on the tranche are Barclays, BBVA, Credit Agricole (admin agent) and RBS. Pemex also wants a new money 5 year term loan for $2bn at L+150bp. BBVA (admin agent), BNP Paribas, Credit Agricole, Citi, HSBC and Inbursa are bookrunners. Fees on the term loan range from 45bp to 85bp for $150m, $100m, $75m and $50m commitments.
Posted inDaily Brief
CFE Looks to Syndicated Loan Market
Mexico’s CFE is looking to raise a syndicated loan, according to market participants, who expect it to be pre-funding for 2011. Mexico’s electricity commission has a $605m loan maturing January 19, according to Dealogic. BBVA, Santander, Credit Agricole, Citi, BNP Paribas and SG were leads on the original transaction, which took place in July 2007. Francisco Santoyo, CFO at CFE, told LatinFinance in September that the company would look to pre-fund for 2011 in order to cushion itself against potential external shocks.
Posted inDaily Brief
Odebrecht Wins Reverse Flex on Loan
Brazil’s Odebrecht has completed a 20bp reverse flex on a $1.1bn 12-year loan to finance construction of 2 oil platforms, according to bankers familiar with the transaction. After receiving $2bn in demand on commitments from 19 banks when it closed last week, pricing fell to 255bp over Libor from 275bp for years 1 through 6. It was also cut, to 280bp from 300bp over Libor, for years 7-12. Bankers expect most of the institutions that had expressed interest to participate, despite slimmer returns. The loan consists of a $220m ECA tranche, while Odebrecht will seek MLAs to build an $860m commercial bank syndicate. Fees for MLAs were said to be 200bp. BNP and HSBC are leading the transaction.
Posted inDaily Brief
BicBanco Signs A/B Loan
BicBanco last week closed an approximately $206m IFC A/B loan to support access to finance for small and medium sized enterprises in Brazil. What the IFC says is its largest syndication for a financial institution in LatAm includes a $25m 5-year A loan. The B loan is divided into 4 tranches consisting of 2 euro loans and 2 dollar loans, with a 2 and 3-year tranche in each currency. The dollar loans consisted of a $25m 2-year loan and a $106m 3 year loan, and the euro tranches are for 2 years for EUR5m and 3 years for EUR30m. The 2-year priced at Libor plus 2.1% and Euribor plus 1.6%, the 3 year was at Libor plus 2.55% and Euribor plus 2.05%. The deal was 40% oversubscribed, says IFC. Banco Itau Europa, Commerzbank, IFC and Standard Chartered were coordinators and bookrunners, with HSBC and Citi also as bookrunners. Commitments were received from Banca Monte Dei Paschi di Siena, ING bank, Oberbank, Santander, Standard Bank, JPMorgan, Bank of America, Israel Discount Bank and LBBW. “IFC has mobilized through its B loan program $1.1bn from international banks to Brazilian midsize banks in the past 3 years, making a significant impact in the banking industry and in its SME clients,” says Stefania Berla, global head of syndications at the IFC. Mauricio Mora, syndications officer at IFC, tells LatinFinance that he expects the multilateral to increase lending to LatAm midsized banks, in particular Brazil and Peru, in 2011.
Posted inDaily Brief
Lenders Predict Loan Market Boost
Bankers are optimistic that the syndicated loans market will pick up in 2011, after agreeing that the attractiveness of the bond market has impacted the loans market this year. “There is a technical imbalance and there is not enough loan demand as the bond market is so healthy,” says Chris O’Neill, svp at Bank of Tokyo Mitsubishi UFJ, adding that it is a borrower’s market. In Mexico, for example, 40 banks compete for a few top tier borrowers, creating pricing pressure not in the US, say market participants. However, LatAm is considered essential to financial institutions. Santander expects 40% of 2010 profit to come from LatAm, says Marcia Vorona, executive director of structured finance at the Spanish bank. Bankers expect to seen an increase in loan activity in oil and gas, particularly in Brazil where it is needed to fund drill ship construction, and in the petrochemicals, metals and mining. Acquisition finance in Brazil, Chile and Peru is also expected. Bankers expect tenors to grow to 3-5 years. “We can also expect to see more Asian banks, in particular from China, participating in transactions,” adds Vorona. The role of multilaterals is also expected to change. “Three years ago there were large projects that would not work without multilaterals. Now this is not the case, so I expect there to be a shift in their focus, to widening access to the global market,” says O’Neill. There is also strong demand for the transactions that do come to market. “There is really a lot of appetite and people do not want their tickets to be reduced, as there is a lack of good assets,” adds Vorona. Ernesto Meyer, head of LatAm syndicated loans at BNP Paribas, adds that international banks trying to boost LatAm exposure use syndicated loans to cross-sell other financial services, in order to catch up with local banks. Although syndicated loans may not be as cheap as the current bond market, issuers should still consider them, say lenders. “By going to the loans market borrowers will