Microfinance is increasingly on investors’ radar screens and S&P is raising coverage of this sector, which is expected to yield deal flow in the Latin capital markets. “The lack of consistent metrics for analyzing MFIs [microfinance institutions] has hindered investment at a time when microfinance is growing at a significant rate,” says Cynthia Stone, managing director and chair of S&P’s EM council. “And despite the level of interest, mainstream investors need standard metrics before they can invest in this particular sector.” S&P says its new report on the sector provides needed recommendations for a rating methodology that can be used globally and consistently to rate MFIs within countries, across borders, and across asset classes. In May, S&P graded the first publicly rated microfinance CDO and it expects to rate an additional two to three transactions in the months ahead, with issuance levels potentially reaching $500m by the end of 2007. “As the existing microfinance institutions also become adept at handling this new inflow of funding, and more MFIs enter the market, securitization volumes could reach between $1bn-$3bn annually over the next decade,” says S&P.
Category: Loans
Copeinca Halts Syndication
Lead banks participating in a $185m 5-year loan at 350bp over Libor to Peruvian fishing company Copeinca, have decided to keep the entire sum on their books because of a series of acquisitions the company is considering which would complicate the syndication. Lead arranger Credit Suisse, and MLAs BBVA, WestLB and Glitnir, the Icelandic commercial bank, have formed a club and will not be syndicating out the loans until Copeinca’s M&A activity quiets down. Bankers who received invitations for general syndication expressed annoyance at the sudden change of plans, which left them without a piece of the attractively priced loan. More financing from Copeinca may come further down the road, say bankers.
Copeinca Fishes For $185m Loan
Copeinca, a fishery based in Lima, is in the process of raising a $185m 5-year loan for acquisitions. The deal, which is heard paying 350bp over Libor, is going out to general syndication this week. The company, listed its shares on the Oslo stock exchange in December, and is using the funds to make acquisitions in the Peruvian fishing industry. Credit Suisse is leading.
Brazil’s Maeda Gets $20m 3-Year Loan
Grupo Maeda, a large Brazilian producer of cotton and soybeans, has signed a $20m 3-year loan at a margin of 300bp over Libor. Natixis and two hedge funds participated in this Standard Bank-led deal. The pre-export financing is backed by a pledge on Maeda’s soybean production and exports. Standard Bank also has a mortgage on Maeda property equalling $30m, which will decrease by a third each year. A European surveillance company will monitor Maeda’s soybean fields, making sure productivity levels meet contract terms, explains Regis Carvalho, vice president, LatAm structured finance at Standard Bank in New York. While the appreciating real still concerns exporters, soy prices, which hit an 11-week high in mid May, are improving, Carvalho says. The deal was oversubscribed, says Carvalho.
High Return, Low Risk
Microfinance institutions have an array of funding sources available, all of which should appeal to investors, says Vikram Gandhi, global head of Credit Suisse’s financial institutions banking group.
Ashmore Flexes Up Price On $1.5 Billion Loan
Ashmore Energy had to flex up pricing on a $1 billion seven-year term loan B, following market resistance. It was originally floated at Libor plus 275 basis points, but raised to 300 basis points after pushback from participants. Price flex is rare in the LatAm bank market and has typically involved downward revisions owing to excess liquidity. The move higher by Ashmore suggests that the days of “anything goes” may soon be over for Latin borrowers. The $1.5 billion loan is being taken out to pay for the acquisition of Prisma and should close early next week. The financing also includes a $500 million revolver. Credit Suisse and JPMorgan are leading, with Citi, Lehman, Deutsche Bank and Goldman Sachs also participating.
Digicel Launches Opco Loan
Jamaica-based telecom Digicel has launched an $850 million five-year amortizing loan for the operating company at 250 basis points over Libor. Proceeds are partly to refinance $600 million in debt. Citi is sole lead.
Dine Launches $130 Million Dual Tranche Loan
Mexico’s Dine, the real estate firm, has launched a $130 million dual-tranche loan. It includes a $100 million amortizing seven-year at 175 basis points over Libor and a $30 million three-year revolver at 100 basis points. Citi is joint books with Inbursa. Proceeds are to repay parent DESC as part of a spin off.
Axtel Doing The Rounds In Bank Market
Mexico’s Axtel is raising $205 million in the bank market to fund its acquisition of Avantel. The deal through Citigroup is priced at 187.5bp over Libor, on a leverage grid. It is a five-year with 36-months’ grace, said bankers considering participating. Comerica, HSBC, Scotia and Standard Bank have signed on as MLAs and the commitment deadline is February 8.
PDVSA Heard Syndicating $1 Billion Facility
Venezuelan oil producer PDVSA is heard in the market with a $1 billion one-year revolver through BNP Paribas, which has an option to renew. The margin is said to be 115bp over Libor, not enough for some bankers looking at it, given the political situation. The deal was launched in December, before the nationalization plan announced by Chavez, and apparently met resistance. ABN Amro, Calyon and Citigroup signed up, according to bankers not on the deal. The rare Venezuelan state-owned credit is cash rich and has a history of meeting its debt payments.