Guatemala’s Banco Industrial priced an offering of Tier 1 capital securities worth $30m. The issue, cloaked in secrecy at the time of pricing last week, is made up of 60-year non-call 10 debt securities that switch from fixed to floating-rate notes in year 10. In the first 10 years, they pay an annual coupon of 9%. In year 10, if not called, they jump to Libor plus 600bp, a figure that was calculated by adding the April 25 10-year Libor spot rate of 450bp to a spread of 150bp. The notes, which priced at par, are rated Ba3/B+/B+, and get 100% equity treatment. At 9%, the transaction was seen as aggressive, especially versus higher-rated hybrids from US commercial banks in the past two months, which were done at 8%-10%. That partly explains the smaller size of the deal, says a banker close to the process. Credit Suisse led and Guatemalan investors were among the buyers.
Category: Central America
Industrial Heard Wrestling with Hybrid
An eerie silence about Guatemala’s Banco Industrial’s 2068 hybrid Tier-1 capital issue leaves bankers at competing shops assuming the worst. The exact amount of the Ba3/B+ rated Reg S issue was not specified, but a size of $30m was rumored to have placed with locals, well shy of the $100m expected. A coupon in the low 9% area was expected for the first 10 years, after which the interest floats at fixed spread above Libor. Despite captive demand from Guatemalan investors, pricing may have been aggressive for such a complicated structure. Last week in Europe, Natixis placed $750m in A1/A+ perpetual Tier-1 notes at 10%. Guidance was 9%-10% for the fixed portion of the Industrial issue. Credit Suisse is managing the transaction. Neither bankers on the deal nor the issuer answered requests for comment.
Banco Industrial Awaits Hybrid Issue
Guatemala’s Banco Industrial was expected to price late last week a 2068 hybrid issue to provide it with Tier-1 capital. The exact amount of the Ba3/B+ rated issue was not specified. Guidance had been given at 9%-10% for the fixed portion of the securities, which after 2018 switch to a rate floating above Libor. Credit Suisse is managing the transaction.
Guatemalan Hybrids Expected to Price
Guatemala’s Banco Industrial is expected to price an issue of Tier 1 hybrid securities as soon as today. Guidance of 9-10% was put out earlier this week for the 60-year notes. The issue is rated B+ by Fitch and Ba3 by Moody’s, both of whom expect to assign the equity credit to the notes. Credit Suisse is managing the sale.
Banco Industrial Prepares Hybrids
Guatemala’s Banco Industrial is preparing to issue Tier-1 hybrid debt securities due 2068. Guidance on the notes is heard at 9%-10%, says a banker away from the deal. The size of the issuance has yet to be determined. The notes are rated B+ by Fitch and Ba3 by Moody’s, both which expect to give the notes an equity classification. The Guatemalan bank, which has been acquiring local rivals, had planned to do an IPO on the Mexican Bolsa. The deal through Credit Suisse was expected in February, but it is now on ice. Credit Suisse is leading the hybrid. Fresh from buying a Honduran bank and on the verge of opening in El Salvador, Industrial continues to push into still relatively virgin Central American retail banking territory. Guatemala’s largest bank also hopes to be the first to forge a path north, with plans to expand into southern Mexico. Industrial’s holding company BI Capital – registered in Panama – has $6.4bn in assets, $3.5bn in loans, deposits of more than $5.0bn and about $650m in capital.
Industrial Evolution
Guatemala’s dominant financial institution, Banco Industrial, awaits a window to raise equity capital to feed regional expansion. The increasingly attractive target says it is not for sale.
Banco Industrial Gets Honduras’ Banco del Pais
Guatemala’s Banco Industrial has agreed to acquire 90% of Grupo Financiero Banpais for an undisclosed sum. Senior officials had told said Industrial would pay about $150m for the Honduran bank when they were working on the transaction. “This is the best way to enter that important market,” Luis Prado, international banking director tells LatinFinance, adding that it is the first step in a regional expansion plan that also includes organically building operations in El Salvador and southern Mexico. The transaction is being financed with shareholder equity and a loan from Standard Bank.
Banco Industrial to Buy Honduras’ Banco del Pais
Guatemala’s Banco Industrial is in talks to acquire Honduras’ Banco del Pais for close to $150m, senior executives close to the discussions tell LatinFinance. The deal is expected to be finalized and officially announced in the coming weeks. The Guatemalan bank, which plans to IPO in Mexico as early as February, is heard to be raising a $165m 3-year loan at Libor plus 250bp to pay for the deal, according to a banker away from the deal. Standard Bank is heard to have the books for the syndication, which is already out to MLAs. Banco Industrial told LatinFinance earlier this Fall that it would look to grow beyond its own borders after having consumed two local banks, Occidente and Quetzal in the past year and a half, and that it was looking at Honduras and El Salvador. Industrial itself was also recently heard to be the object of some M&A due diligence by regional giant HSBC.
Banco Industrial Confirms Mexico Listing
Guatemala’s Banco Industrial has confirmed that it plans to go public next year. Diego Pulido, the bank’s corporate director, tells LatinFinance he has hired Credit Suisse to sole lead the IPO, scheduled to go out sometime between February and March. The offering will be done on Mexico’s Bolsa, says Pulido, and details about the size of the raise and percentage of the company to be sold are still being worked out. Proceeds are being used to fund the bank’s Central American expansion, notes Pulido. Acquisitions in Honduras and El Salvador are expected. Industrial has 28.5% of the Guatemala market by assets, according to Fitch. Industrial’s ROA (1.2% at year-end 2006) and ROE (16.8%) place it among the most profitable of the country’s large banks. The move to list in Mexico for a non-Mexican issuer is a boost for an exchange that has underwhelmed this year, especially compared to Brazil’s equity boom.
Banco Industrial Rejects Sale Rumors
In response to rumors, Guatemala’s Banco Industrial categorically denies that it is up for sale. “That’s absolutely false,” Diego Pulido Aragon, director of Corporacion Banco Industrial, tells LatinFinance. “The bank is not for sale. There aren’t even any discussions about it. There is no interest in selling to anyone,” he affirms. Industrial is leading the consolidation drive in Guatemala and also looking to other Central American markets. Pulido expects to announce a Honduras acquisition in two weeks and says a purchase in El Salvador should follow. Industrial has 28.5% of the market by assets, according to Fitch. Industrial’s ROA (1.2% at year-end 2006) and ROE (16.8%) place it among the most profitable of Guatemala’s large banks. But after relying on shareholder investment for capital, Industrial must now devise other means of raising funds, and Fitch identifies capitalization as the weak point in the country’s banking system. The bank is considering a public offering.