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.
Category: Regions
Petrochemical Producer Makes DCM Debut
Mexico’s Grupo Idesa generated $400m in orders for its $300m international bond debut, according to people following the sale, pricing at a yield in line with initial expectations. The 2023 NC4 priced at 99.34 with a 7.875% coupon to yield 8.000%. The BB minus/BB minus rated petrochemical producer was seen offering 100bp versus where fellow Mexican industrial Grupo Kuo would price a new 10-year bond. Fund managers accounted for 65% of the trade, private banks 20%, insurance companies 5% and other investor types 10%. Approximately 30% came from Mexico, 50% from the US and 20% from EMEA. Morgan Stanley, HSBC and Scotiabank managed. Idesa is seeking funds to refinance $195m of existing debt and for general corporate purposes, including capex and other investments. Idesa co-sponsored the Etileno XXI project in Mexico with Brazil’s Braskem, which closed a $3.2bn loan package in December 2012.
Trinidad Returns to Bond Market
Trinidad and Tobago returned for its first international bond since 2007, upsizing by $50m to $550m after getting $5bn demand. The A/Baa1 rated sovereign priced at par with a 4.375% coupon, to yield tight to the 4.750% initial price talk. It was up 1.5 points in the grey Wednesday, traders say. “Trinidad and Tobago received good sponsorship at 4.75% and with other BBBs trading around 4.125%-4.500% area, Trinidad provides value at mid-to-low 4.000%,” Oppenheimer’s managing director of investments Carl Ross tells LatinFinance. Trinidad’s existing 2020 and 2027 bonds, traded to yield around 2.55% and 4.00%, respectively. These levels make the new bonds appear cheap, Ross says, but this can be misleading, as the existing bonds are illiquid small and held by locals. Trinidad has authorization to issue up to $1bn. It had been considering a new bond during the past few years, both to finance the budget deficit, and to reestablish a presence in the international markets. The sovereign also benefits from low borrowing costs in the domestic market. Citi managed Wednesday’s transaction. Trinidad’s previous dollar bond was a $150m 20-year sold in 2007.
Digicel Adds to 2020
In a continuing demonstration of demand for high-yield credit in the region, Digicel tacked on an extra $500m to its 2020 senior notes, bringing the size to $2.0bn. The Digicel Limited unit reopened the 8.250% coupon bonds at 103.000 to yield 7.488%, in line with 103.000 price guidance. The proceeds are marked for general corporate purposes, which could include capital expenditures, investments, acquisitions or debt repayment. The Caa1/B minus transaction was led by Citigroup, JPMorgan, Barclays, Credit Suisse and Deutsche Bank. Digicel first issued $1.5bn of the 2020 in September 2012.
RE Fund Taps Mexican DCM in Size
On a day that saw five LatAm cross-border bond sales, the region’s largest deal came from a domestic market. Mexico’s Fibra Uno real estate trust has raised MXP8.5bn ($654m) in Mexico’s bond market, according to people following the sale, representing the first time a Fibra real estate fund taps the local buyside. The three-tranche transaction is also the Mexican market’s largest from a non-government issuer this year, and drew about MXP10.5bn total demand. A MXP4.35bn peso-denominated 2019 tranche priced at TIIE+80bp. A MXP2.0bn peso-denominated fixed-rate 2023 tranche pays 8.4%. A MXP2.15bn UDI-denominated 2028 tranche pays 5.09%. The issuer elected not to use a 20-year fixed-rate peso bond that had also been an option. Afores and financial institutions were heard participating mostly in the two longer tranches, with mutual funds and private banks present in the TIIE tranche. Proceeds will be used to refinance bank debt. The issuer says its leverage has reached about 35% of its portfolio, in line with a goal to keep it under 50%. BBVA Bancomer, Banamex, Credit Suisse and Santander managed. The fund was Mexico’s first Fibra to IPO, in 2011. Mexico’s domestic DCM issuers have raised $22.09bn-equivalent this year through Wednesday, according to LatinFinance data, already passing the full-year 2012 total of $18.56bn.
Mexicans Buy into Spanish Bank
A group of Mexican investors led by the Del Valle family has agreed to a partnership with Spain’s Banco Popular, and will invest EUR450m ($621m) in the bank. The group of investors will come away with 6.4% of Banco Popular, at EUR3.95 per share, representing a 10% discount to the previous closing price. Shares closed Wednesday at EUR4.10. Under the agreement, Banco Popular will buy a 25% stake in the Del Valle’s Ve Por Mas brokerage in Mexico, for EUR97m.
Santander Mexico Pioneers Basel III T2
Santander Mexico is preparing to roadshow LatAm’s first Basel III-compliant Tier 2 bond, a 10-year $1bn note that carries risk of coupon deferral or principal write-down. Coupons on the instrument will be deferred, cumulatively, if the bank’s core tier one ratio breaches 7% of risk weighted assets (RWAs), LatinFinance understands. The instrument will take a partial principal write-down if the bank’s capital falls below 4.5% of RWAs, according to Moody’s. The deal, which should set a precedent for further sales of Tier 2 debt in the region, is 75% underwritten by the parent company. The bank plans to meet investors Monday through Wednesday in Los Angeles and New York, according to people familiar with the sale. Deutsche Bank, Morgan Stanley and Santander are managing the deal, rated Ba1/BB/BB+, below the bank’s Baa1/BBB/BBB+ senior rating. Santander Mexico is aiming to have a Tier 1 capital ratio of at least 12% and a Tier 2 capital ratio of approximately 2.5%. In November 2012, Santander Mexico debuted in the international market with a $1bn senior unsecured bond, getting $4.3bn in demand and a 4.351% yield, or UST+260bp.
Sigma Talks Acquisition Loan Terms
Mexico’s Sigma Alimentos has met banks to discuss a $1bn senior unsecured term loan facility, LatinFinance understands. The 5-year loan is offered at Libor+125bp and is tied to a leverage grid. Bank of Tokyo-Mitsubishi is leading. Joining as MLAs are Bank of America, BBVA, BNP Paribas, Citi, Credit Agricole, HSBC, ING, JPMorgan, Mizuho, Natixis, Rabobank and Sumitomo Mitsui. Two additional tiers are available, with a $50m lead manager ticket on offer at 50bp, as well as $25m arranger spots at 40bp. Commitments are due in January. The Grupo Alfa food products subsidiary is making a EUR675m ($908m) bid for European meat company Campofrio Food Group. It is also planning an IPO with Citi, Goldman Sachs, Bank of America Merrill Lynch and Banorte-Ixe for 2014.
Canadian Sells Colombian Pipeline Position
Canada’s Talisman Energy has sold its 12% position in Colombian pipeline operator Ocensa to US private equity firm Advent International for $595m, it says, a key part of Advent’s purchase of a 22% stake. Talisman retains transportation rights for the 830km pipeline, which links the Llanos Basin to the Covenas port in Colombia. Advent is working on a $600m loan to help fund the purchase of 22%, which includes portions owned by France’s Total and Spain’s Cepsa in addition to Talisman’s piece, according to people following the process. The 7-year amortizing loan pays Libor+450bp. Citi, Itau and Natixis are leading the transaction, expected to close before the end of the year. The total purchase price of the 22% stake is expected to be more than $1bn.
Sovereign Turns to Loan Market
After electing not to pursue a bond transaction in October, Barbados is considering a $150m, 5-year syndicated loan, according to people familiar with the process. The facility would pay Libor+700bp and feature an 18-month grace period. Credit Suisse and First Caribbean are leading the effort. The Ba1/BB minus island nation had been looking to replace some $250m of its 7.25% 2021 and 7.00% 2022 bonds, and met investors in September to discuss a new 2025 note. However, market conditions were not to its liking, and it postponed in October. Deutsche Bank and CIBC were managing. Barbados was planning to offer accepting 2021 holders $980 per $1,000 principal, and 2022 holders $960 per $1,000, and to pay around 8.75% for the new bond. The borrower is facing mounting external pressures associated with a widening current account deficit, financing challenges, and a high fiscal deficit, S&P said last month when downgrading the credit to BB minus. The pressure comes largely from a decline in government revenues as a result of the weak economy.