Peru’s central bank held rates at 4.0% at its monthly meeting. “This level of the reference rate is compatible with an inflation forecast of 2% in the forecast horizon (2014–2015),” the bank says in a note following the decision. It also takes note of Peru’s inflation, which is in the target range, GDP and supply considerations, and global economics. In November, the central bank surprised the market with a cut from 4.25% after 29 months of holds. The next policy meeting will be January 9.
Category: Regions
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Oaxaca Set for Guaranteed Domestic Bond
The Mexican state of Oaxaca is looking to pay 8.50%-area on a fixed-rated domestic bond scheduled to price Wednesday, according to a person familiar with the issuer’s plans. The MXP2.76bn ($210m) 15-year bond comes with a 1.5% guarantee from funds received by the federal government and 25% from monthly government federal transfers to states and municipalities. Oaxaca is raising funds for public investment. Banamex, Interacciones and Santander are managing the deal, with Cofinsa as structuring agent.
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S&P Cuts Vene
S&P has lowered Venezuela’s credit rating to B minus from B, it says, due to a “radicalization” of economic policy. The results of recent municipal elections are likely to reinforce the recent trend toward government intervention, creating more uncertainty regarding the country’s economy. “We expect a continuation of erratic economic policies in Venezuela that, along with pressures on external liquidity and sustained political polarization, will exacerbate the government’s dependence on oil prices and weaken its capacity to manage adverse shocks,” the agency says. Particularly worrying for S&P is new legislation allowing for President Nicolas Maduro to rule by decree. Sustained political polarization and growing economic distortions could “materially increase” the risks for the government debt over the next two years. The outlook is negative.
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Aval Defines FO
Colombia’s Grupo Aval has set terms for what should be a COP2.41trn ($1.25bn) equity follow-on. The financial group plans to offer 1.86bn common shares at COP1,300 each. The common shares closed at COP1,280 Thursday. The issuer does not yet define the timing for the sale, though the price is typically set in Colombian ECM transactions immediately before the opening of the subscription period. Existing holders will be allowed to subscribe their rights, and are expected to make up a large part of the sale. This is seen as driving the issuer’s choice to not use the SEC process for which it registered earlier this year, and opt for a more easily completed local sale, in which the issuer has better control over price. Aval is funding a busy M&A agenda, having completed in April the purchase of BBVA’s Horizonte Colombian pension operation for $530m, and is working on closing the $411m purchase of Guatemala’s Reformador and the $646m purchase of BBVA Panama. Separately, Aval’s Banco de Bogota subsidiary is scheduled to complete a COP1.0trn follow-on of its own December 18. Aval is expected to use some of its proceeds to replace funds used to subscribe to the Banco de Bogota transaction.
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Interbank Taps Domestic Market
Banco Internacional del Peru (Interbank) has sold $50m in subordinated bonds in Peru’s local market, according to people familiar with the sale. The transaction was upsized from $25m to $50m. The 10-year bonds pay 7.50%. Interbank’s capital markets arm led the deal, rated AA/AA on a national scale.
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Axtel Progresses in Step-Up Exchange
Mexican telecommunications company Axtel has received acceptance from holders of $83m of the 7.625% 2017 notes it is targeting in an exchange as of the early deadline, it says. In an offer launched last month, Axtel is offering new 2020 step-up bonds to holders of the 2017s and its 9.000% 2019s. It is offering holders of the $133m outstanding in 2017s $985 per $1,000 principal before the December 6 early deadline and $910 after. Accepting holders of the $135m outstanding in 2019s would get $875 per $1,000 principal through the early deadline and $800m after. Axtel does not give any indications of results from holders of the 2019s. The full offer expires December 20. The total amount in the exchange and new sale is capped at $146m. Axtel issued $249m in the 2020s in an exchange completed in February, also targeting holders of the 2017s and 2019s in a addition to peso debt.
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Bahamas Decides to Wait
After finishing fixed-income investor meetings this month, Bahamas has decided to wait on its international bond plans, according to a finance ministry spokesperson. “From our point of view, feedback was positive but we took the decision to start investor meetings early and want to issue in 2014,” says spokesperson. The sovereign tends to issue every 4-5 years, but is under no funding pressure to issue. While Bahamas would consider a similar size and tenor to its last bond transaction, it would also consider any tenor between 10 and 30 years. The A3/A minus borrower sold $300m in 2029 bonds at a yield of 7.0% in 2009, while getting $400m in orders. The 2029 bonds were seen trading to yield 5.75% last week. JPMorgan and RBC managed the meetings.
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Actinver Adds Equity Capital
Mexico’s Grupo Financiero Actinver has priced a MXP690m ($53m) equity follow-on, according to regulatory filings. The brokerage is selling 58.1m primary shares, including a 15% greenshoe, at MXP13.95 each. The level represents a 4.5% discount to the previous MXP14.60 closing price. Shares closed at MXP14.19 Wednesday. The issuer received 5x demand, and it expects to spend 67% of the proceeds to fund existing operations, 13% on working capital and 20% to expand into new product areas. Actinver and BBVA managed the transaction. The brokerage raised $68m-equivalent in its 2010 IPO. Elsewhere in ECM, Brazil’s Via Varejo was scheduled to price today a follow-on targeting more than BRL3bn ($1.29bn). Colombia’s Banco de Bogota should close a COP1.0trn ($517m) follow-on December 18 to finish off new issuance for 2013.
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Honduras Upsizes Post-Election Bond
The Republic of Honduras has issued $500m in new 7-year bonds, doubling the expected size on high demand. The B2/B sovereign was one of five cross-border issuers Wednesday looking to take advantage of last week’s first debt portfolio net inflows in months and squeeze a deal in before the end of the year. Honduras got about $1bn in demand, according to an investor, and had been planning to issue the $250m remaining under an authorization, but decided to add another $250m as part of prefunding efforts for 2014. The 2020 priced at par to with an 8.750% coupon, yielding at the tight end of 8.750%-8.875% guidance that followed “very high 8s” talk. The bond traded up 0.25 points in the grey Wednesday, investors note. Honduras was seen offering buyers a 25bp-30bp new issue premium. The transaction follows the favorable resolution of a $205m US lawsuit – which had hampered its March bond sale – and a market-friendly outcome to the November presidential elections, in addition to negotiations with the IMF. Honduras finance minister Wilfredo Cerrato told LatinFinance in October the sovereign was looking to leverage these developments to sell a new $250m 5-year bond. Investor feedback and strong interest, however, was heard swaying the borrower to opt for the 7-year. A retap of the $500m 10-year sold in March was deemed not possible due to tax restrictions. Proceeds are being used to cover short-term indebtedness. Deutsche Bank was sole lead. Elsewhere in DCM, Wednesday’s $2.25bn parade included Trinidad and Tobago, AES Gener, Idesa and Digicel. The Bahamas ended fixed-income investor last week and remained to announce any deal.
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CFE Hits Local Market
Comision Federal de Electricidad (CFE) has raised MXP1.66bn ($128m) in Mexico’s domestic bond market, according to a person familiar with the terms. The 4-year bond issued through the Fideicomiso de Administracion de Gastos Previos (FAGP) trust pays TIIE+25bp. The state-owned utility uses the Bancomext-guaranteed FAGP trust to pre-fund subcontractors’ authorized expenses under a special infrastructure program that cannot be reimbursed before project completion. BBVA was sole lead on the transaction, rated AAA on a national scale. The previous FAGP sale was a 3-year bond done last year at TIIE+35bp through Scotia. Last month, CFE raised MXP10bn through the sale of new 10-year bonds at 7.77% and a reopening of 2018 floating rate notes at TIIE+13bp.