Category: Loans

WestLB is assembling a group of MLAs to provide some $1bn in construction financing for Empresas ICA’s 750MW hydroelectric project in Mexico’s Nayarit and Jalisco states. The Comisión Federal de Electricidad announced last month that ICA submitted the lowest bid, and is expected to confirm the award as soon as this week, following a technical review. HSBC, NordLB, Banco Santander, BBVA and Citi have been invited to join the 4.5-year loan.

Syndications for Waldo’s, a Mexican discount retailer, are heard to be nearly complete, according to bankers close to the deals. Waldo’s is raising $120m in a two tranche loan – a $70m 5-year A-tranche at 450bp over Libor, and a second lien $50m B-tranche at 750bp over. The two tranches were flexed up by 50bp and 100bp respectively three weeks ago, reflecting participants’ wariness on participating in a highly levered transaction. The book is now heard to be practically full, with a few signings pending. Bankers away from the deal were skeptical about whether it would succeed given its highly levered nature and the fact some of the proceeds will repay a private equity sponsor. Elsewhere in loans, Cydsa, an exporter of chemicals and materials based in Monterrey, is heard close to wrapping up a $150m refinancing through a limited syndication. Citi has books on both deals.

Pricing is out on a $3bn equivalent in Mexican pesos loan for the FARAC toll road. The biggest local currency syndication to date is a 7-year stepping up from 165bp over Libor in year one to 185bp in years two and three, 200bp in years four and five, and 225bp in years six and seven, say people familiar with the issue. Santander underwrote the deal and is leading syndication while joint-bookrunners Dexia and NordLB have committed to $500m each. MLAs are being asked to purchase tickets of $300m for an up-front fee of 100bp and a 10bp underwriting fee. The loan is heard to have no rating, following speculation that it would be high grade to sell to domestic pension funds. Bank market participants say the transaction, which will set a benchmark for the next toll road financing, is well structured. But there is some concern about the feasibility of such a large volume, understood to be the biggest project deal in LatAm to date. Participating banks may struggle to obtain the pesos necessary to commit to the tickets, say bankers away from the deal. And this is just the first of at least five such auctions that will surely involve similar financing structures, meaning banks will look to keep some dry powder. The bank meeting in New York Thursday was heard well attended, following launch Tuesday in Mexico City. ICA and Goldman Sachs Infrastructure Partners are running the toll road project.

In the ongoing EM turbulence, Merrill Lynch says cash – with Libor at 5.5% – will outperform bonds and it sees opportunities to sell on strength. “At the long end, we would recommend selling bonds. However, in the intermediates, we would recommend buying protection, as it is likely to widen and the CDS-to-bond basis should also widen as the market deteriorates further,” says Merrill. It compares the current turmoil to 1998, but says this time round, EM is more of a bystander, with balance sheets and cash-flow positions in much better shape. At the weak end of the spectrum lies Argentina, where investor perception is deteriorating on concerns about remaining financial needs, inflation reporting and fiscal slippage. “Furthermore, the country has been unable to secure a solid investor base, as its new bonds are not part of the major indices (they are issued under local law),” says Merrill. Based on liquidity (FX reserve position, external debt service indicators, covered versus uncovered financial needs) and solvency (public debt/GDP, CA positions), Mexico is in a strong position, it adds. However, its relative strength would change if the mortgage crisis in the US ends in a full blown recession, given linkages between Mexican manufacturing and the US industrial sector, says Merrill. “This situation would be less of a concern for the case of Brazil, for instance, where exports are well diversified and where there is less of a direct impact from the US real economy,” the shop adds.

Mexico’s America Movil has adjusted terms on a $2bn 5-year bullet loan, which pays 25bp over Libor. The terms on the financing, which was taken out in April of last year, were changed so that it is now a revolving credit facility instead of a bullet loan. The final maturity is still 2011 and all 24 banks on the original deal have apparently agreed to the change. The alteration reflects the borrower’s desire for more flexibility on taking out and repaying the funds, according to a banker on the deal. In April 2006, bookrunners Citi, ABN AMRO and Inbursa led what was then seen by some as a novel Dutch auction to determine pricing on the loan, launched with a ceiling of 27.5bp and squeezed down to 25bp.

Peru’s Pesquera Diamante has closed a $165m 5-year term loan at 350bp over Libor. MLAs, who purchased tickets of $22.5m each, include JPMorgan, BNP Paribas, BBVA and Santander. Proceeds are being used for acquisitions. Citi led.

Syndication of a $120m two-tranche loan for Mexican low-end retailer Waldo’s is moving along slowly but surely, according to bankers close to the transaction. The book on the facility, which has a 5-year $70m senior piece paying 400bp over Libor and a 7-year $50m junior portion paying 650bp over, is heard to be more than halfway filled, says a person close to the deal. Bankers away from the transaction were curious to hear how it was shaping up, given the fact it is so highly levered, involves a second lien, and proceeds are being used to pay private equity sponsors a return on their investment. Despite these features, the loan does carry covenants and sets the borrower on a declining leverage structure, says an executive involved in the financing. A vague target date of late August has been assigned. Citi is leading.

Pemex is seeking to reduce pricing on two $1.25bn bullet loans, one of three years and one of five years, to Libor plus 20bp and Libor plus 25bp respectively, says a banker not on the deal. Barclays, Calyon and BBVA are leading the process, the first two of which were leads on the existing facilities. The state-owned oil company held a bank meeting Monday and will hold another today in Mexico City.

Peruvian fishing company Pesquera Diamante has launched a $165m 5-year loan at Libor plus 350bp, via Citi. The deal is being shopped to MLAs. The proceeds are being used to fund acquisitions, much in the same way another fishing company, Copeinca, used the proceeds of a recent $195m Libor plus 350bp loan, to scoop up smaller competitors. Executives close to Diamante, however, say the use of proceeds is very clearly delineated in this deal, unlike their competitor’s financing, which changed course midstream thanks to a series of new purchases, preventing a full syndication of the loan despite earlier plans to do so.

Offshore drilling platform concessionaire Delba Marítima, based in Rio, has launched a $488m Petrobras platform financing at Libor plus 237.5bp in the 3-year construction period and Libor plus 250bp in the 7-year post construction period. Abu Dhabi-based SPM is building the platform. The IDB is heard to be actively considering participating in an A-tranche loan, according to a banker on the deal. WestLB is leading and has secured four MLAs. Grupo Schahin is also going out to general syndication to raise $800m for two Petrobras platforms that will pay 237.5bp over Libor in the 3-year construction period and 162.5bp-200bp in the post construction period, depending on performance availability metrics. Bank meetings are being held in São Paulo and New York. The deal is joint-led by Mizuho, WestLB, Standard Chartered and Unicredit.