Fitch has affirmed Bermuda’s long-term foreign currency issuer default rating at AA+ (stable). Bermuda’s 2007 general government debt as a proportion of GDP was 6.1%, versus a AA category median of 24.1%. A high per capita income, low public debt burden, and mature domestic political system support Bermuda’s creditworthiness, Fitch says. “The ratings also reflect Bermuda’s strong offshore international financial center underpinned by a proven track record of effective management of the economy and business environment,” Fitch adds. Bermuda has a 10% of GDP policy limit for net general government debt and a sinking fund for repayment of future maturities. Limited information about the debt of foreign-owned entities residing in Bermuda remains a key rating constraint, even though these liabilities are highly unlikely to affect Bermuda’s public finances or the domestic financial system, says Fitch.
Category: Topics
Ultrapar Bags Texaco’s Brazil Operations
Ultrapar is buying Texaco’s Brazilian fuel marketing business from Chevron for BRL1.16bn. The transaction is to be paid with Ultrapar’s own cashflow, the company says. The acquisition comprises of approximately 2,000 service stations and 48 distribution terminals, Ultrapar says. The purchase will allow Ultrapar’s gas station network Ipiranga to get national coverage, the company says. Ipiranga’s and Texaco’s operations will create a network of 5,000 service stations, comprising 23% of the Brazilian market, Ultrapar says. Merrill Lynch advised the Brazilian company on the purchase, a company spokeswoman says. In June, Ultrapar acquired 100% of port terminal operator Uniao Terminais for BRL482.7m. Freshfields was the legal advisor to Ultrapar on Texaco.
M&A Fees Jump 18%
Debt and equity markets may be dying, but M&A is thriving, particularly in Brazil, and investment banks are making serious money. The latest numbers from Dealogic show an 18% increase in disclosed M&A advisory fees, to $359m in the year to mid-August, from $304m in the corresponding period of 2007. Credit Suisse has grabbed the lead, with a hefty $80m in fees so far, some 22% of the LatAm M&A pool. This is a 123% improvement versus last year’s $35m and almost 13% more than the shop made in the entire 12 months of 2007. Citi meanwhile has dropped to second place, with $64m, down 24% on 2007. Rothschild has leapt to third, with $31m in fees, and the next four places are taken, respectively, by: UBS, Goldman Sachs, JPMorgan and Morgan Stanley. M&A market participants expect another banner year from LatAm in 2008.
Mexican Microfinancier Plans Share Buyback
Banco Compartamos plans to ask its shareholders to approve a MXP700m share buyback fund. The Mexican microfinance bank’s shareholders will vote August 26 on transfer of retained earnings to a special buyback fund, to be used without a time limit. The program would help “maintain a market for the company’s shares,” it says.
Orica Raises Peru Mining Stakes
Melbourne-based conglomerate Orica has purchased the 48.6% it did not own of its Peruvian mining joint venture Samex from its partner Enaex for $58.2m. Completion of the acquisition is expected by the end of October, Orica says.
Pinfra Holds Jumbo MXP Road ABS
Mexican infrastructure operator Pinfra has delayed a MXP6.5bn securitization to refinance debt tied to the Mexico-Toluca (Mextol) toll road concession which had been set to price today. “It has been postponed, but the structure hasn’t changed, it’s still in the market,” Pinfra CFO Carlos Cesarman tells LatinFinance. He adds that the delay was caused by regulatory issues remaining to be straightened out, rather than external problems or choppy market conditions. ING is managing the transaction, which coincides with widespread volatility that has made investors much more selective and vigorous in their credit work. In addition, Banxico meets Friday, and analysts expect another 25bp hike. Local investors are still cash rich but they want higher returns to cover the uptick in risk, particularly for structured products, where “back to basics” is the mantra. Borrowers generally have been unwilling to concede sufficient spread. Pinfra had planned to sell around MXP6.5bn equivalent in 2030 bonds denominated in the UDI inflation-linked unit to replace some MXP5.57bn in UDI bonds issued in 2006. Funds remaining after the repurchase can be used for additional construction.
Lehman Warms to Argentina Warrants
Despite a generally bearish view on Argentina, Lehman sees value in sovereign GDP warrants, especially when hedged with CDS. “If Argentina does not default, the warrants offer significant upside in the long term,” says the shop. Lehman’s models show the USD and EUR warrants having theoretical values of $16.85 and $14.50, respectively, while they trade in the market at discounts of nearly 50%. “These estimations already take into account the bearish sentiment by discounting expected coupons by current CDS levels plus an additional 250bp to account for a lower recovery rate and higher risk premium on the warrant,” says the shop. On the USD warrants, Lehman expects total payments through December 2010 of $8.94, and $8 for 2011 to 2035. It sees best value in EUR warrants, saying that they are 3.6% cheap to the USD warrants, whereas they normally trade 1% rich.
Metrofinanciera Tees Up RMBS Against Odds
Mexico’s Metrofinanciera is planning to issue MBS worth approximately MXP2.3bn, despite choppy markets, competing large issues and financial troubles that drag its rating ever closer to implied high default probability levels. Metrofinanciera has filed to issue MXP1.6bn equivalent in 2033 notes denominated in the UDI inflation-linked unit and MXP769m in MXP-denominated 2038 notes. Each will be further divided into two pieces which amortize one after the other. The transaction backed by a pool of Metrofinanciera credits is rated AAA on a national scale by all three agencies and will be managed by Deutsche Bank. Metrofinanciera has not set a date for the sale, but CFO Nicolas Palacios tells LatinFinance it should come in September or early October, at an expected spread of 40p wider than its April issue of MXP750m in 2038 RMBS, which came at TIIE plus 250bp. S&P Wednesday chopped Metrofinanciera’s counterparty credit rating to B from B+, BBB minus from BBB on a national scale, amid concerns about a deteriorating funding profile and limited liquidity. The issuer faces a rocky RMBS market in which competitors HSBC, Infonavit and Su Casita are all preparing sales north of MXP2bn each for August and September.
Marfrig Readies Private Share Feast
Brazilian meat processor Marfrig plans to raise BRL1.375bn from a private share sale, to fund its acquisition of Grupo OSI’s operations in Brazil and Europe. Existing Marfrig shareholders will have first rights to buy 64m new voting shares for BRL21.50 each, during a period to be defined this week. Marfrig agreed in June to purchase the OSI assets for $400m cash and $280m in shares. There is no bank involved, according to a Marfrig investor relations official.
Posadas and LaSalle Team Up for Hotels
Real estate player LaSalle Investment Management has signed a pact with Mexico’s Grupo Posadas to invest $60m in the development of eight of Posadas’ Fiesta Inn and One hotels. Under the terms of the agreement, Posadas will build and operate the hotels. In July, Grupo Posadas placed MXP750m in 2013 to yield TIIE+190bp. The issue was a retap of a MXP1.5bn deal sold in April to help fund the repurchase of dollar bonds.