The IDB has approved a $154m loan to the Brazilian state of Amazonas to finance the construction of drainage, sewage, and solid waste collection and disposal systems in its capital, Manaus. The loan, which will be priced over Libor and will mature in 25 years with a 5-year grace period, will finance 70 percent of the total cost of the project. The facility complements another loan from the multilateral granted to the state in 2006 to begin sanitation and other water works in the Educandos/Quarenta watershed, which is located in the heart of Manaus.
Category: Topics
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S&P Gets Negative on Nemak
S&P has revised the rating outlook on Mexico’s Nemak to negative from stable. The agency is concerned by the high debt levels the auto parts maker maintains amid a deteriorating global auto industry. Its A+ national-scale rating could be lowered, it said, if Nemak’s debt-to-EBITDA ratio – now at 3.9x – remains above 3.3x for the next year, or if its operating cash flow becomes negative.
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Caribbean Telecom Dials up Loan
The Caribbean subsidiary of UK-based Cable Wireless has landed $300m through a syndicated loan, say bankers familiar with the deal. The 3-year facility pays Libor plus 225bp. The deal is priced as a Caribbean credit, though the borrower benefits from the sponsorship of its UK parent, say the bankers. C&W has operations in 13 Caribbean jurisdictions including Jamaica, the Cayman Islands and Barbados. BNP Paribas and JPMorgan led the deal, much of the syndication for which is heard to have been run out of London. Elsewhere, Digicel, one of the largest telecoms in the Caribbean, was heard testing market appetite for a loan. Sellsiders close to the company, however, deny the company is in the market for new funds.
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Trinidad’s RBTT Eyes Jamaica Highway Financing
RBTT is eyeing the expansion of Jamaica’s Highway 2000 that should come to the market in 4 to 5 months, according to Christopher Mack, vice president of capital markets for RBTT. The $300m deal will be a combination of a refinancing of bonds issued to fund the first phase of the project and new debt, Mack says. RBTT was the lead bank in the placement of a February 2004 $130m bond issue that financed the first phase of the highway, Mack adds. RBTT was acquired by Canada’s RBC in June for $2.2bn.
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Infonavit Readies New RMBS
Mexico’s federal housing fund Infonavit plans to sell about MXP3.5bn worth of RMBS at the end of August, José de Jesus Gómez, a director at the mortgage lender, tells LatinFinance. The UDI-denominated offering will add to a modest pipeline of mortgage-backed paper that is building despite hostile market conditions. Last week BBVA Bancomer landed a record MXP4.83bn RMBS issue, rekindling hopes for a market has struggled in the face of sub-prime concerns and rising local inflation and interest rates. The Infonavit issue, tentatively slated for August 27, will be similar in size and structure to the MXP3.5bn 25-year UDI- denominated offering placed June 10. That deal involved two tranches with average lives of 2.8 years and 7.7 years at 110bp and 129bp, respectively, over comparable udibonos. Gómez hopes for similar spreads, though he acknowledges that will depend heavily on shifting market conditions. Banamex and Deutsche Bank are leading the deal, with HSBC as co-lead. The issue will bring 2008 cedevis issuance to about MXP10bn, within reach of the lender’s MXP15bn target for the year.
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Car Rental Plans Small-Cap IPO
Brazilian vehicle rental company LocarAlpha has filed for an IPO on the Bovespa Mais, a section of the exchange reserved for small and mid-cap listings. The Sao Paulo-based company would be the second to list on the exchange segment following the February listing of Nutriplant, which sold 2m shares at BRL10.00 each. LocarAlpha has hired Santander to lead the transaction, but has not disclosed the timing or expected size. The company generated BRL88m in revenue in 2007, up from BRL79m in 2006, from vehicle rentals, sales and outsourcing business lines. It plans to use the proceeds to expand its vehicle fleet.
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Durango Goes Down
Fitch has chopped Mexico’s Corporacion Durango to CC and keeps it on negative watch amid continued deterioration in the business and financial profile. “Prices for these two key components of the company’s cost structure are not expected to abate in the near future, which heightens risk that the company will not be able to meet its near-term debt obligations,” says the agency. Durango ended June 30 with $35m in cash and marketable securities and $12m of short-term debt. On October 5, the company is scheduled to make a $26.5m coupon payment on notes due in 2017. The rating implies recovery in the event of default of 31%-50%.
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Peru Rate Hike Expectations Fueled by Inflation
Peru’s Central Bank was expected to increase its reference rate by 25bp to 6.25% last night following its monetary policy meeting, according to Credit Suisse. Although headline and non-food inflation increased slightly in July, the tightening at monetary policy is aimed at curbing domestic demand growth and at preventing second-round effects from food and fuel inflation, CS adds. In its last meeting, the bank increased its interested to 5.75% to 6%.
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Vale Says Not Seeking Big Ticket M&A
Roger Agnelli, the CEO of Brazilian miner Vale, says he is not focused on large acquisitions, according to wire reports citing his remarks on a Thursday conference call. A more likely scenario is for Vale to make small and medium-sized purchases, according to the reports. Agnelli reportedly considers acquisitions possible but not probable. The company is also actively developing a number of organic growth projects. Earlier this year Vale tried to acquire Xstrata for some $90bn, and raised upwards of $50bn in debt financing for the deal, which fell apart before any agreement was signed. It is also in talks to acquire Paranapanema assets in Brazil, and rumored as a potential bidder for CSN’s Namisa and Mexico’s Autlan, both of which are on the block. In June it raised $12bn through an equity follow-on without specifying use of proceeds, other than saying capex and potential acquisitions were possible. An eventual acquisition of Lonmin by Xstrata would make the Swiss company even more expensive. Xstrata this week made an unsolicited bid $10bn for Lonmin, which was summarily rejected by the target.
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Gavea Targets Public Equity for PE Fund
Brazil’s Gavea Investimentos will in its third $1.2bn PE fund continue to participate in privately arranged deals that involve taking equity stakes in public, or soon to be public companies, Arminio Fraga, the asset manager’s founder, tells LatinFinance. Aside from its usual strategy – illiquid investments in growing, privately held companies that are still a ways from being ready for an IPO – Gavea will look at privately marketed deals from more mature entities, or even outright market purchases to generate returns. “There are many more opportunities now in the private market. There are lots of [companies] trying to raise capital now,” says Fraga, referring to difficult public equity market conditions. The former central bank president notes that Gavea’s last fund made several purchases of pre-IPO notes. These include Bovespa, Magnesita, OGX – which sold $1bn in equity 6 months prior to IPO – and Aracruz.