The Dominican Republic came to the international markets to sell a new $500m 2024 bond, surprising those expecting a retap of the existing 10-year. The sovereign was working under a $500m authorization, and a finance ministry spokesperson had told LatinFinance earlier this month that a new benchmark bond or retap was under consideration. “It is odd they issued a new 2024 after issuing one earlier in the year, but at the same time there is not the same appetite for duration as there used to be back in April,” says one west coast EM portfolio manager, noting that a bond longer than 10 years might have previously been in consideration for its market return. The investor notes the new bond came about 30bp wide to the existing 2024. Monday’s 2024 bullet bond priced at par with a 6.60% coupon, at the tight end of 6.60%-area guidance that followed 6.75% initial price thoughts. The bond traded up 0.75 points in the grey Monday afternoon, according to an investor. The Dominican Republic is raising funds to finance infrastructure projects and support other sectors of the economy, as well as boost dollar liquidity in the country and ease currency depreciation. Citi led the transaction, rated B1/B+. The $1bn 2024 amortizer sold in April was the country’s largest-ever sale.
Category: Regions
Colombia targets “10% to 25%” foreign holdings of TES: Janna
Colombia hopes to increase the amount of local currency debt sold internationally, despite peso depreciation cutting appetite
Fitch Lifts Ecuador
Fitch has raised Ecuador’s credit rating to B from B minus, it says, based on an improved outlook. The upgrade reflects healthy economic growth, as well as monetary and financial stability underpinned by dollarization and a steady easing of external and fiscal financing risks as a result of favorable international oil prices. Oil production has recovered and is likely to increase, underpinned by development of mature fields through enhanced recovery, Fitch says. The agency sees financing as manageable for the next two years. Although Ecuador’s fiscal deficit could deteriorate to 2.8% of GDP during 2013-15, Fitch does not anticipate financing problems due to the country’s access to Chinese and multilateral funding. Ecuador has precautionary credit lines with China in the event of external shocks, and the World Bank might resume funding for certain projects. The country hoped to tap the international debt markets in 2014, if not before, Francisco Rivadeneira, the country’s international trade minister told LatinFinance earlier this month. Fitch forecasts growth of 3.8% in 2013 and 4.2% in 2014-2015, broadly in line with rating peers. Public expenditure, especially investment, is likely to remain as the driver of growth. The outlook is stable.
Fovissste Nears RMBS
Mexican government housing lender Fovissste plans to raise up to MXP5.5bn ($419m) through a domestic RMBS sale October 22, according to people familiar with the plans. Fovissste initially targeted a sale last week. The 26-year fixed-rate bond is denominated in UDIs and comes with a 23.2% partial guarantee from Mexico’s Sociedad Hipotecaria Federal (SHF). Proceeds will fund Fovissste’s lending. Banorte-Ixe, CI Casa de Bolsa and Actinver are managing the sale, rated AAA on a national scale. Fovissste last visited the local market in May, raising MXP6.87bn in a UDI-denominated 2043 issue which was priced at 2.58%, or Udibonos+180bp.
Costa Rican Bank Hits the Road
Banco Nacional de Costa Rica (BNCR) plans to start fixed-income investor meetings today, according to people familiar with the matter. The Costa Rican lender is visiting accounts in Lima, Santiago, London, New York, and finishes in Los Angeles and Boston Thursday. Ratings agencies see a $500m size as likely and assign Baa3/BB+. The tenor remains to be defined. Bank of America Merrill Lynch and JPMorgan are managing the process. State-run Banco Nacional de Costa Rica is the country’s largest bank, providing an array of personal, corporate and SME development banking products and services. The bank operates a network of more than 170 offices and more than 400 ATMs nationwide.
Hochschild Loan Moves toward Close
Peruvian miner Hochschild is in the process of syndicating a $340m bridge loan, according to people familiar with the process. Bank of America, BBVA and Goldman Sachs are leading the 1-year facility, with pricing based on a ratings grid at Libor+350bp out of the box. It is expected to close by the end of this month. Earlier this month, Hochschild launched an operation to acquire International Minerals, owner of 40% of the Pallancata mine and Inmaculada advanced project in Peru, for $298m, with funding coming through the bridge facility and a $73m equity placement done earlier this month. In the acquisition, International Minerals holders were to receive $2.38 per share and one share in a new spinoff company holding International’s non-Peru assets. The target’s shareholders were to vote on the deal in November or December. Bank of America Merrill Lynch and Goldman Sachs managed the placement of shares.
Davivienda Increases Bond Program
Banco Davivienda’s board has approved an increase of its bond issuance program to up to COP6.0trn ($3.1bn), the Colombian bank says in a filing. The documents modify a previous program of COP3.0trn. Davivienda has three years to use the funds, and may issue ordinary or subordinated bonds. The bank last issued in the domestic market in February, raising COP500bn.
CFE Refreshes Curve
Mexico’s Comision Federal de Electricidad (CFE) took advantage of improving sentiment following the end of the US shutdown, to raise $1.25bn in new bonds. The government electricity monopoly drew $7.7bn in orders for the 2024, according to people following the sale. Starting wide at UST plus mid-260s talk, CFE slashed guidance to 240bp (+/minus 5bp) before launching at 235bp. The Baa1/BBB/BBB+ bond priced at 99.427 with a 4.875% coupon to yield 4.948%. “Price talk started cheap offering around 40bp, and the issuer walked down to 240bp to finally offering a tight concession. Despite tightening, investors feel comfortable with the credit risk even though a lot of value has been taken away,” says an investor following the trade who spotted CFE’s 2021 bonds trading at a g-spread of 222bp and calculated a 13bp concession. Bankers familiar with the transaction saw an 8bp concession versus a g-spread of 227bp for the 2021. The deal attracted high quality accounts from the US, Europe, Latin America, according to people following. Barclays, Citi and Goldman Sachs managed the deal, which followed three days of investor updates. The transaction follows a $900m-equivalent domestic market bond in June and a $750m 30-year international bond sold last year. Ahead in the DCM, Banco do Brasil is still considering a new euroyen bond, and Brazil’s JBS and Chile’s Entel are meeting investors ahead of deals that could arrive as soon as next week.
Interacciones Sale Relies on Domestic Buyers
Domestic buyers accounted for more than 80% of the book on Grupo Interacciones’ MXP4.2bn ($327m) equity sale, according to pricing documents. The Mexican specialist in public sector and infrastructure lending received 2x demand in the “re-IPO” follow-on Wednesday, done to increase the issuer’s overall float and raise funds for expansion. The Mexican specialist in public sector and infrastructure lending sold 39m primary shares and 30m secondary shares at MXP61.00 each, towards the bottom of the MXP60.00-MXP69.00 range. Secondary share sellers included controller Carlos Hank and members of his family, who saw their holding reduced to 69% from more than 90%. Barclays and Credit Suisse were global coordinators, with Banorte-Ixe and GBM as bookrunners on the domestic portion.
Pemex Contractor Prices Rig Debt
Mexican oil services provider Oro Negro has raised a $175m 2014 bond to partially finance a jackup rig, according to people familiar with the terms. The bond, issued through the Oro Negro Fortius entity, priced at par with an 8.70% coupon. The bond features an interest rate step-up of 300bp from February 2014 through the October 2014 maturity. Ultimate parent Integradora de Servicios Petroleros Oro Negro started operations in February 2012, with the purpose of becoming an integrated and diversified oil and gas services company offering services to Pemex, through the acquisition of assets and of companies with existing contracts. Pareto Securities was sole lead on the transaction, done under the 144a format and Norwegian law.