The Bank of Tokyo-Mitsubishi UFJ has named David M. Gruppo head of LatAm corporate and investment banking, a newly created position. He will report to Randall Chafetz, head of corporate and IB for the Americas. Gruppo has held LatAm corporate and investment banking positions at Goldman Sachs, Morgan Stanley and Santander. Most recently, he has been in various capacities with IBM, including its TJ Watson Research unit.
Category: Chile
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AquaChile $100m Equity Raise
AquaChile has retained IM Trust to help it raise $100m in equity ahead of a potential IPO, according to a Chile based banker not involved in the deal. According to the banker, AquaChile is hoping to IPO in 1-2 years. AquaChile was not immediately available for comment and IM Trust did not return calls. A report in the Chilean press says that AquaChile could bring in a strategic partner for 20%-30% of its equity.
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Lenders Predict Loan Market Boost
Bankers are optimistic that the syndicated loans market will pick up in 2011, after agreeing that the attractiveness of the bond market has impacted the loans market this year. “There is a technical imbalance and there is not enough loan demand as the bond market is so healthy,” says Chris O’Neill, svp at Bank of Tokyo Mitsubishi UFJ, adding that it is a borrower’s market. In Mexico, for example, 40 banks compete for a few top tier borrowers, creating pricing pressure not in the US, say market participants. However, LatAm is considered essential to financial institutions. Santander expects 40% of 2010 profit to come from LatAm, says Marcia Vorona, executive director of structured finance at the Spanish bank. Bankers expect to seen an increase in loan activity in oil and gas, particularly in Brazil where it is needed to fund drill ship construction, and in the petrochemicals, metals and mining. Acquisition finance in Brazil, Chile and Peru is also expected. Bankers expect tenors to grow to 3-5 years. “We can also expect to see more Asian banks, in particular from China, participating in transactions,” adds Vorona. The role of multilaterals is also expected to change. “Three years ago there were large projects that would not work without multilaterals. Now this is not the case, so I expect there to be a shift in their focus, to widening access to the global market,” says O’Neill. There is also strong demand for the transactions that do come to market. “There is really a lot of appetite and people do not want their tickets to be reduced, as there is a lack of good assets,” adds Vorona. Ernesto Meyer, head of LatAm syndicated loans at BNP Paribas, adds that international banks trying to boost LatAm exposure use syndicated loans to cross-sell other financial services, in order to catch up with local banks. Although syndicated loans may not be as cheap as the current bond market, issuers should still consider them, say lenders. “By going to the loans market borrowers will
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Transelec Lays Down Shelf
Chile’s Transelec is planning to raise up to UF10m ($439m) in new debt, after receiving shareholder approval for a new 1-year debt shelf. The power transmission company may sell dollar bonds, domestic bonds denominated in USD, CLP or the UF inflation-linked unit, or sign bank loans. It does not specify use of proceeds or any specific upcoming transaction. The issuer has preferred domestic markets to cross-border in recent years, having most recently raised $132m equivalent in December 2009, and tendering earlier that year to swap $220m in dollar debt to pesos.
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Codelco Tours Bond Comeback
Codelco is set to begin meeting US West Coast fixed income investors today, on a trip that will take it to the East Coast and Europe through October 27. The Chilean state-owned copper miner has not given an indication of the size or maturity it is seeking. It received authorization in July from its board for $1.8bn in debt at maturities up to 30 years, and had been shopping for banks since August. Deutsche Bank and HSBC are managing the process. The A1/A miner is a somewhat infrequent issuer, having last sold $600m in 7.5% of 2019s in January 2009 through HSBC and JPMorgan, to a $1.25bn order book.
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Cencosud/Bretas Won’t Harm Competitors
The acquisition of Brazilian supermarket operator Bretas by the second largest Chilean supermarket operator shouldn’t have a serious effect on the local market, according to Barclays. Cencosud agreed to buy Bretas for BRL1.35bn. Of the price, BRL1bn is due at closing, BRL100m at the end of 2011 and BRL250m at the end of 2014. According to Cencosud, the deal is being financed through three bank loans totaling $290m. In a research report analyzing the effect of the acquisition on CBD, the parent of Pao de Acucar, Barclays says the merger will have on a “marginal effect” on the largest Brazilian supermarket by market share. The deal seems to be in line with a sector trend in which regional chains are selling out to larger retailers, according to the report. CBD will likely be an active consolidator in the market, according to Barclays. The deal represents Cencosud’s first foray into the states of Minas Gerais and Goias, according to the company. Cencosud says no financial advisors were used. CreditSuisse says the acquisition price, with an implied multiple of 0.5x P/S for 2010, is reasonable compared to recent comparables, which have occurred in the 0.6x to 0.9x P/S area. Celfin meanwhile says the transaction represents EV/S of 0.64x for 2009 and 0.54x for 2010E and expects Cencosud to issue additional debt to finance the transaction, along with a potential acquisition of the 38.6% stake it does not own in its Argentine supermarket unit Jumbo Retail. A spokeswoman says the $290m debt portion of the deal will come from 3 bi-lateral loans. Celfin says the deal strengthens its buy recommendation for the stock. The deal follows Cencosud’s acquisition of the GBarbosa supermarket chain in Brazil for $430m in 2007.
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Cencosud Buys Into Brazil
Cencosud, Chile’s largest retailer by sales, has agreed to buy Brazilian supermarket operator Bretas for BRL1.35bn. Of the price, BRL1bn is due at closing, BRL100m at the end of 2011 and BRL250m at the end of 2014. The buyer says a BRL182m adjustment will be made for financial debt and working capital. According to Reuters, which cites the buyer, it will finance the purchase through bank debt totaling $290m, and the rest funded by cashflow. The target is a privately-held owner of 62 supermarkets, 3 distribution centers and 10 service stations in central and northern Brazil. It is controlled by the Duarte De Assis family, employs about 10,000 people, had sales of BRL2.1bn last year and may generate revenue of BRL2.5bn this year, according to Cencosud. “With this strategic acquisition Cencosud enters the states of Minas Gerais and Goias, consolidating its relevant position in the Brazilian supermarket market,” says the Santiago-based retailer.
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Edenor Gets 80% in Liability Management
Endenor says it has received $116.7m (78.5%) in outstanding 10.5% of 2017 bonds from the market, via repurchase and exchange offers expiring at the end of the month. The Argentine electric distributor has received acceptance from holders of $30.6m (20.6%) for direct repurchase, and $86.1m (57.9%) in exchange for new 9.75% 2022 bonds. The offer is funded by the sale last week of an additional $140m of the new B2/B minus 9.75% 2022 NC8 bonds, which priced at par. “Given the company’s quality and the favorable technicals, we think these notes could easily go to 104-105 very rapidly, post issuance,” Barclays says in a report, despite the fact that the new notes priced at the tight end of the initial 9.75%-9.875% guidance. In the offer launched October 3, Edenor was offering the new 9.75% of 2022 bonds, at rate of $1,030 principal per $1,000.00 tendered, plus a $70.90 cash bonus if done by October 15, or at $1,030 principal plus $50.90 cash if done by the November 1 expiration. The alternative option was a full cash payment of $1,060 per $1,000 principal if done by October 15, or $1,045 if done after. Deutsche Bank, JPMorgan and Standard Bank are managing the process.
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Molymet Hits Equity Road
Chile’s Molymet has launched investor meetings ahead of its November offering of a 10% stake on the domestic stock market. The metals processor expects to raise more than $200m in the sale, which is designed to increase the liquidity of its float and raise funds for expansion. The tour will also include a US and European portion. The Gianoli, Mustakis and Matte families, who hold 96% of Molymet, have waived their priority rights to ensure a broad sale to the public, the company says. Banchile Citi and IM Trust are managing the sale, for which the issuer has not set an exact date. Molymet’s 4-year expansion plan is aimed at fulfilling growing demand for molybdenum, a copper byproduct used to strengthen steel, as the world economy recovers and steel consumption grows in Asia. Molymet shares closed Friday at CLP12,350.
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Chile Tightens Policy Rate
As expected, Chile has tightened its monetary policy rate by 25bp to 2.75%, slowing from the 50bp hike seen in the past 4 months. The central bank says in a statement that the domestic market has seen robust growth in line with expectations. Bank of America Merrill Lynch says in a research report that the reduction in the pace of hikes is also brought by the appreciation of the CLP, which it forecasts will strengthen to CLP500 per USD by the end of 2011 from the CLP530/USD level it expects to see in December 2010. Local shop Celfin forecasts that the rate will increase to 3.25% by the end of 2010.