Mexichem is scheduled to price today an equity offering of more than $1bn, becoming the latest Mexican issuer to take advantage of investor appetite for the country. The industrial conglomerate is offering 260m shares, assuming a 15% greenshoe is used, in an all-primary share sale that would raise MXP15.74bn ($1.23bn) at Monday’s MXP60.53 closing price. Mexichem is raising funds for general corporate purposes, including expansion projects and working capital. Citi, HSBC, JPMorgan and Morgan Stanley are managing the international portion of the transaction, joined by BBVA on the Mexican portion. The sale follows a $1.15bn well-demanded international bond sale last month, as Mexichem continues to raise funds following the $500m acquisition of Dutch pipemaker Wavin.
Category: Regions
S&P Lowers Grenada into Default
S&P has lowered Grenada’s rating to selective default (SD) from B minus, it says, following a missed coupon payment. The government failed to make a September 15 installment on its $193m 2025 bond. S&P notes that Grenada stated its intention to use its best efforts to pay the coupon within a 30-day grace period, and the agency says it will make an additional comment as the government’s liquidity situation and future debt payment plans become clear. The outlook is negative.
Sicrea Nears ABS Retap
Sistema de Credito Automotriz (Sicrea) plans a MXP300m ($23m) reopening of its 2017 bonds backed by trade receivables Thursday. In the original deal, Sicrea priced MXP1bn of the 2017 bonds at TIIE+160bp. ING is managing the transaction, rated AAA on a domestic scale. Sicrea is an association of Nissan dealers which provides auto loans.
Yum Subsidiary Set for MXP Bond
Mexico’s Premium Restaurant Brands is scheduled to price today MXP500m ($38m) in domestic 2015 bonds, according to a person familiar with the sale. Price talk for the floating-rate bond, which comes with a 60% partial guarantee from Scotia, is TIIE+250bp-300bp. Scotia is managing the transaction, rated A+ on a national scale. The fast food retailer is a unit of Yum International with 500 restaurant locations within 31 Mexican states.
UnitedHealth Pays up for Brazil Entry
UnitedHealth Group has agreed to pay $4.9bn to buy 90% of Brazil’s Amil Participacoes, the companies say, in a transaction seen as coming at a significant premium. The agreement gives the largest US healthcare operator an entrance into an underpenetrated Brazilian market and control of the country’s largest healthcare organization. The deal for 359m shares comes at BRL30.75 ($15.15) per share, representing a 21.5% premium to Friday’s BRL25.30 close. “This is a high price. We think UnitedHealth must see a large upside,” says a Sao Paulo equity analyst. He sees the transaction coming at 32.4x 2012 price/earnings and 26.4x 2013 p/e, compared to the respective 26.5x and 20.7x levels at Friday’s closing price. The US operator is paying up for an association with founder and CEO Edson Bueno – who keeps a stake and joins United’s board – and his track record in Brazil, as well as for access to a more vertically integrated model than it has in the US, the analyst notes. Both could be useful for future EM expansion as well as making improvements in United’s home market. Raymond James sees the deal at 38.2x 2013 p/e, it says in a report, yielding a 76% premium to Amil’s historical averages. “The valuation is rich for this kind of business, but the growth potential is much better than the US-based options,” Matthew Cofina, an analyst at Morningstar, tells LatinFinance. He notes it could boost United’s margins going forward, and that Brazil is an attractive base for possible additional acquisitions. UnitedHealth will buy Amil in a two-step process, with Brazilian tax benefits reducing the effective cost of the acquisition by $600m to $4.3bn. Following Brazilian regulatory approval expected in 4Q, UnitedHealth will buy 60% percent of Amil’s outstanding shares from controllers. In 1H 2013, it will make a public offer for the remaining 30% percent. Bueno has also agreed to invest about $470m in UnitedHealth stock and hold the shares for five years, with Bueno and partner Dulce Pug
Negative Outlook for Vene on Wide Chavez Victory
A wider-than-expected margin of victory for President Hugo Chavez in Venezuela’s presidential elections should mean increased pressure on Venezuelan assets, analysts say. With today the first session of open US markets following the election – which Chavez was estimated to have won by 10% – at least some degree of selloff was expected. “We expect a knee-jerk reaction of downward pressure on Venezuelan bond prices, and if President Chavez decides to deepen his ‘XXI Century Socialism’, we would expect Venezuela’s creditworthiness to erode further in the medium term,” Nomura says, noting the market had been positioning for a close election. “The victory by Chavez should weigh on Venezuelan bonds when U.S. markets reopen on Tuesday,” Citi says, expecting a 100bp-150bp widening. Others expect a smaller reaction. “It is difficult to expect much of a selloff considering that the closing credit spreads unwound most of the Capriles optimism as investors took profits ahead of the event,” Jefferies says, noting spreads had already unwound back to relative levels from when the elections were mostly viewed as a non-event.
Pinfra Parks Equity Sale at Discount
Mexico’s Promotora y Operadora de Infraestructura (Pinfra) has priced a MXP4.43bn ($349m) equity follow-on, coming at an 8.5% discount. The Mexican concession operator priced 70.4m shares, including the assumption of a 15% greenshoe, at MXP63.00 each, it says, versus Thursday’s MXP68.85 closing price. The shares closed down 2.21% at MXP67.33 Friday, on a day when the Bolsa gained 1.24%. Pinfra’s order book was 2x covered, according to bankers on the sale, with the main investor groups including LatAm-dedicated investors, global infrastructure investors and Mexico’s pension funds. About 51% of the sale went to international buyers, according to regulatory documents, up from the 42% expected pre-sale. About 70% of the shares sold in the deal were secondary shares held by members of the Penaloza family and various investment funds. The public float was to increase to 46.1% from 29.5%, with controlling shareholders ending up with a 44.5% stake and funds linked to Grupo Bursatil Mexicano 9.4%. Proceeds from the primary portion are going toward general corporate purposes, including greenfield and brownfield construction. The sale also aimed to increase the liquidity of the issuer’s shares. Pinfra operates 13 road concessions, edging out ICA’s 12 to be the leader in Mexico, which account for 85% of revenue. Pinfra and the buyers in follow-on are betting it can win more greenfield and brownfield projects. It is difficult to define their chances before the new presidential administration enters, analysts say, but there is some degree of optimism given president-elect Pena Nieto’s track record while governor of the state of Mexico. Credit Suisse and JPMorgan managed the international portion, joined by Banorte-Ixe on the domestic side. Pinfra had filed earlier this year aiming for a sale in the June-July window, but decided to wait until 4Q. Founded in 1969 as Grupo Tribasa, Pinfra develops and operates road and port concessions and produces materials used in road constructio
IFC Takes Corpbanca Stake
The IFC continues its investments in expanding LatAm financial groups, agreeing to spend $225m on an about 5% stake in Chile’s Corpbanca, according to a spokeswoman. The IFC expects to complete the buy by the end of the year or early 2013. The investment should help Corpbanca grow in Latin America, particularly in its service to small and medium enterprises, it says. Mexico, Peru and Brazil are among the countries of interest to Corpbanca in terms of expanding its reach. The IFC has made other equity investments in LatAm financial groups with cross-border expansion plans. It took a $200m position in Colombia’s Suramericana last year to aid with the groups purchase of ING pension assets, and also has a position in Davivienda. CorpBanca bought the Santander unit in Colombia for $1.16bn earlier this year.
SIPyT Targets October Sale
Servicios Integrados de Pasaje y Turismo (SIPyT) is aiming to sell up to MXP3.5bn ($251m) in Mexico’s domestic bond market on October 25. The 15-year securitization is backed by receivables from bus fleet operations, and will be denominated in UDIs or pesos. The transaction would be a debut for SIPyT, a unit of Mexico’s Inversionistas en Autotransportes Mexicanos Servicios (IAMSA). Santander is managing the deal, rated AAA on a national scale. Crecimiento Programado is structuring agent.
Isagen Gets Baa3
Moody’s has given a Baa3 to Colombia’s Isagen in a first-time rating of the government-controlled power company, the agency says. The rating is supported by the 57.66% majority ownership from the government, as well as its position as largest wholesale power generation company in Colombia in terms of installed capacity. The agency also factors in construction risk associated with Isagen’s generation projects. The outlook is stable.