Brazil’s Itau BBA leads the LatAm ECM league table, perhaps for the first time ever, after dethroning longstanding incumbent Credit Suisse. Itau has led $4.53bn worth of equity deals, across six offerings year-to-date, topping Credit Suisse’s $4.03bn across seven deals, according to Dealogic. Volume for the Brazilian shop is almost twice that of the corresponding period of 2007, but it has done less than half the number of issues. JPMorgan comes third for ECM, with $3.77bn in volume, followed by Unibanco, UBS and Bradesco. “We’ve been able to leverage our corporate business and relationships by providing top quality and proven execution in equities, M&A and fixed income,” boasts Jean-Marc Etlin, head of Itau BBA. Itau is also raking in fees, with $82bn from ECM, M&A and DCM this year. Itau had lead roles in mega follow-ons Redecard, Gerdau, and Vale, as well as OGX’s June IPO. And the pipeline looks firm, not just from Brazil. Itau has lead roles in two upcoming IPOs from non-Brazilian issuers, an up to $4bn jumbo from Argentina’s YPF – which is hoping to come this year – and San Antonio Internacional, which could be over $500m. Rivals are quick to dismiss the achievement, in what they say is an unrepresentative year for flow. Citi and JPMorgan also held pole position this year, only to fade away, they say. But based on strong ties to high profile issuers, Itau’s equity platform appears robust. Meanwhile, last year’s leader UBS appears to have dropped out of the race, while compatriot Credit Suisse struggles to distance itself from the slew of underperforming IPOs it launched over the past two years. Many of last year’s equity dogs featured questionable pre-IPO loans handed out to issuers for reportedly juicy fees.
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Totvs, Datasul Print Merger
Shareholders of Totvs and Datasul have approved the Brazilian software makers’ merger. Totvs will issue 4.46m shares, a 14.3% stake, to Datasul shareholders, and will also pay them a BRL480m dividend. To help fund the transaction, Totvs has secured a BRL205m 6-year loan from development bank BNDES at TJLP plus 150bp, and plans to sell BRL200m in 2019 debentures, also paying TJLP plus 150bp. UBS says in a report it views the deal as accretive to Totvs, and finds the two companies’ customer bases – Datasul mostly sells to larger customers than Tovts’ – to be complementary.
Cemex Still a Buy: Banif Ixe
Banif Ixe is maintaining its buy recommendation on Cemex and has a year-end target price of MXP27.00 for the company’s shares. “Although we see as negative that last night the Venezuelan government took over the operations of Cemex in Venezuela, the impact of the lost ebitda is not enough to change our recommendation,” says the shop. The nationalization of the company’s assets will reduce Cemex consolidated ebitda by around 3.7%, add the analysts. A takeover implying firm value to Ebitda multiple of 6.2x would make for a favorable transaction for Cemex, says Banif Ixe. “If this happens, Cemex will receive approximately $1.02bn from the Venezuelan government, with a neutral impact on the company.”
Citi Unveils Honduras Operation
Citi’s Honduran unit Banco Citibank de Honduras has begun operations. The bank is the result of the merger between Banco Cuscatlan and Banco Uno. “In Honduras, we see a financial system that has evolved in the right direction, that allows free competition among global and local institutions and that allows that competition to bring benefits to the clientele,” Edgardo del Rincon, the executive in charge integrating Citi’s operations in Central America, tells LatinFinance. “We see Honduras … as an important player in the context of Central American integration,” he says. Citibank de Honduras will have $400m in assets, engaging in micro lending, retail, commercial and corporate banking operations, as well as a credit card unit called Cititarjetas de Honduras.
Infonavit Sets RMBS Sale Date
Mexican mortgage lender Infonavit plans to sell MXP3.53bn in 2030 RMBS as soon as Wednesday, August 27. The issue denominated in the UDI inflation-linked unit will be divided into a MXP1.67bn first tranche and a MXP1.86bn second tranche that amortizes after the first but is not subordinate. The bonds are backed by a pool of 24,000 mortgages. The sale, rated AAA on a national scale, is the third from a MXP15bn shelf. Banamex and Deutsche Bank are managing the transaction, with HSBC as co-manager. Infonavit placed a MXP3.5bn 2023 RMBS issue in June, in two tranches pricing at udibonos plus 105bp and 135bp, respectively. HSBC is set to place its own MXP1.93bn MXP-denominated RMBS issue on Friday, while Metrofinanciera is preparing a MXP2.3bn deal for September.
Brazil Homebuilder M&A Gains Momentum
The much anticipated wave of mergers in the Brazilian homebuilding space is in full swing as stocks of smaller and medium-sized companies continue to get hammered, creating bargain opportunities for cash-rich buyers. One potential deal in the making is the acquisition of Company, a high-end apartment developer in Sao Paulo, by Brascan Residential Properties, a Bovespa-listed entity 60% owned by Brookfield Asset Management, say people away from the talks. Nick Reade, chairman of Brascan Residential, declines to comment on potential targets, limiting his remarks to “We believe in the consolidation process and are looking at several options right now.” Company’s stock has careened some 56% since hitting a high of BRL22.81 in mid-November. Its market cap stands at BRL716m. In April, Brascan Residential acquired MB Engenharia for an open-ended price tag that could range from BRL160m-BRL500m or more, depending on future earnings. In June, Cyrela paid BRL1.54bn for fellow developer Agra, while earlier this month Brasil Brokers took a 51% stake in Abyara’s brokerage business for BRL250m. Among the more vulnerable Brazilian developers are Inpar, down 82% from its IPO, EZ Tec, down 70%, CR2, down 59% and Helbor, down 46% from its IPO price. Brascan Residential’s stock is down 60% from its IPO, but the company counts on sponsorship from its wealthy parent, which has some $40bn in global real estate holdings.
Tourism Developer Pulls IPO
Summer Brasil Turismo has canceled plans to go public on the Bovespa. The transaction had been on ice since the spring, when it was postponed due to poor market conditions. Following the expiration of its postponement period , the company formally removed its filing from the CVM. “We are considering various alternatives,” Andre Menezes, head of IR, tells LatinFinance, adding Summer Brasil would consider a private share sale, or an attempt to return to the public markets at a later date. Menezes declined to state the amount of proceeds Summer is seeking to finance its tourism-related developments in Brazil’s northeastern region. UBS was to lead the equity sale, originally announced in January.
GMAC Mexicana to Sell Auto Loan ABS
GMAC Mexicana is preparing to sell floating-rate MXP-denominated bonds backed by a pool of auto loans. The size and tenor have not yet been defined, but the offering will consist of at least one subordinated tranche. Although GMAC’s Financiera and Hipotecaria units have issued MBS in Mexico, this offering would be the first securitization by GMAC Mexicana, the auto loan unit. Scotia is managing the transaction, expected in the next one to two months, according to executives close to the process.
Venezuela Unlikely to Knock Cemex
The seizure of the Venezuelan assets of Cemex by the Chavez government will not have a huge impact on the Mexican firm’s overall financial performance, according to analysts. “The Venezuela business is very small in the big scheme of things,” says Revisson Bonfim, an analyst at Fitch. “We believe that in the end of the day Cemex will end up selling the entire company to the government. The big question is whether or not they will receive market value for those assets,” he adds. Production from Venezuela represented only 3.7% of the consolidated Ebitda of Cemex, Rodrigo Herrera Matarazzo, an analyst with Ixe Casa de Bolsa in Mexico City says. “Even though this process of negotiation could be extended, we don’t see a mayor effect on consolidated results,” he says. Previous businesses nationalized in Venezuela went for a reasonable price, notes Bonfim. However, Matarazzo is cautious on the outcome of negotiations. “Once the agreement has been reached, then we can qualify whether it is good or bad [for Cemex],” he adds. Yesterday, S&P affirmed its BBB (negative) long-term corporate credit rating on Cemex and subsidiaries based on expectations that the company will reach financial targets in the next two quarters.
Moody’s Moves Peru Closer to I-Grade
Catching up with the other agencies, Moody’s has raised the foreign-currency bond rating of Peru to Ba1 from Ba2, one level beneath investment grade. The shop has been the most conservative of the three major ratings agencies during Peru’s recent period of unprecedented growth and macroeconomic stability. Fitch gave Peru a BBB minus grade in April, and S&P followed in July. “The upgrade was prompted by steady improvement in Peru’s sovereign credit profile driven by a continued and accelerated strengthening in the balance sheet of the government and the local banks,” says Moody’s. Peru’s government has also reduced the proportion of foreign currency debt, and banking system, has greatly reduced the share of dollar-denominated loans and deposits. The agency expresses concern, however, that socio-economic challenges pose potential political risks to the country’s medium-term outlook. “All three agencies have recognized that Peru has significantly improved its credit profile and that the improvements made are likely to be sustained,” says Goldman Sachs, commenting on the Moody’s move that it sees as “warranted and well deserved.”