Banco Davivienda has issued COP500bn ($275m) in Colombia’s domestic bond market, according to sources following the deal. The bank sold COP96m in 2015 bullet bonds at 6.52%, COP174bn in 2022s at IPC+4.07%, and COP230bn in 2027s at IPC+4.23%. Total demand was more than 2.5x. Davivienda plans to use proceeds for the development of its credit business. Davivienda’s own brokerage led the sale, rated AAA on a local scale. In June, the Colombian bank saw 6x demand for its first-ever dollar bond, a $500m 5.875% 2022 yielding 5.950%.
Category: Regions
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S&P Positive on Colombia
S&P has revised the outlook on Colombia’s BBB minus rating to positive from stable, it says. The change reflects the growing possibility that effective implementation of fiscal policy following earlier reforms could improve the sovereign’s financial profile, by reducing its debt and interest burdens, the agency says. “A gradually declining debt burden, combined with continuity in key economic policies in coming years, could sustain GDP growth, strengthen the resilience of the Colombian economy, and reduce its vulnerability to external shocks, leading to a higher rating,” S&P says. The agency could revise its outlook back to stable if the strengthening of the government’s financial profile is reversed by unexpectedly large fiscal deficits and potentially lower long-term growth prospects.
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Belize Inches Closer to Default
Belize is unable to make a $23.1m coupon payment on its $543.8m outstanding in 2029 “super bonds” scheduled for August 20, the government says, moving the situation closer to a default and possible decision to accelerate by its bondholders. “We simply cannot afford this coupon payment given the financing shortfalls and other challenges we face. Our hope is that we move quickly toward a sensible restructuring of the instrument,” Prime Minister Dean Barrow says in a statement. The government says restructuring scenarios proposed last week would close its financing gaps in a sustainable manner. The bonds include a 30-day grace period on all interest and principal payments, after which a credit event or default could be declared, and bondholders could accelerate the bond. “They have plenty of money in foreign exchange reserves and budget account to pay the coupon. But if they choose not to, it sends a harsh signal to the market and takes the restructuring to a more adversarial realm,” says an investor following the situation. “We are sympathetic to the challenges facing Belize. However, we do not consider the indicative scenarios released last week as the start of negotiations,” says an ad-hoc bondholder group formed in response to the situation, now said to include 30 holders representing $275m. Restructuring scenarios were released despite an absence of material information necessary to evaluate the country’s debt sustainability, the group adds. Possible debt restructuring scenarios divulged last week include haircuts and maturity extensions. A first scenario entailed no reduction of principal, a 15-year grace period, a 2% coupon and final maturity of 2062. A second saw a 45% haircut, no grace period, and a coupon of 1% through 2019, 2% through 2026 and 4% through a 2042 final maturity. A third included a 45% haircut, 5-year grace period, 3.5% coupon, and mature in 2042. The government has not made any indication as to whether it would pursue any of the three. “A cred
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Miner Swaps CEOs
Gregory Johnson has left his role as president and CEO of Vancouver-based mineral exploration company South American Silver to pursue other interests, the LatAm-focused miner says. The company has appointed COO Phillip Brodie-Hall as interim president and CEO. Brodie-Hall has been COO of the company since November 2011, and had been consulting for the company prior to that role. South American Silver has projects in Chile and Bolivia.
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Alfa to Split Shares
Mexico’s Alfa plans to carry out a stock split, it says. The conglomerate is issuing 10 new shares for every share currently owned. The plan is to be approved by shareholders at the end of the month. Alfa shares closed Tuesday at MXP222.61 ($16.90).
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Banco Compartamos Sets Target
Mexico’s Banco Compartamos is looking to pay TIIE+70bp-area on a new 5-year bond of up to MXP2bn ($152m), according to a source familiar with the microlender’s plans. The deal scheduled for August 22 would be the fourth under a MXP6bn program. Bancomer, Banamex and HSBC are managing the sale, now rated AAA/AA on a national scale. Following an S&P upgrade to AAA on a national scale from AA, the bank is eyeing more competitive pricing. Compartamos last visited the local bond market in August 2011, when it sold MXP2bn in 2016 domestic bonds at TIIE+85bp.
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Scotia Makes Colombia, Mexico Buys
Scotiabank continues to expand in the LatAm, with a pair of small but strategic buys in Colombia and Mexico. The Canadian bank has agreed to buy a 51% stake in Colfondos AFP from the Colpatria holdco. The deal follows last year’s $1bn buy of 51% of Colpatria itself, though Scotia says Tuesday’s is a separate transaction. Colfondos is the fourth-largest out of five pension funds in Colombia, accounting for about 10% of the assets under management, but people following the sector point to strong growth possibilities. Scotia does not disclose the size of the deal, saying the terms of the transaction are not financially material. “This is relatively small, but it is important to have integration with the other Colpatria assets,” says a Colombia-based analyst following the country’s banks. He notes that Colfondos has about $110m-equivalent in equity, and that previous deals in the sector have gone at 1.6x-1.8x equity, but cautions that such a comparison is difficult as several other factors would be in play. Scotia specifically highlights expanding Colfondos, which has AUM of $9.25bn-equivalent, in its plans. Scotia also operates pension funds Profuturo AFP in Peru, acquired in 2008, and Scotia Crecer AFP in the Dominican Republic, acquired in 2007. Separately, in Mexico, Scotiabank has agreed to acquire all of the shares of Credito Familiar from Banamex. It does not disclose the value of the transaction.
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Moody’s Lifts Suriname
Moody’s has raised Suriname’s credit rating to Ba3 from B1. The move is based on an assessment of the country’s robust growth, driven by gold mining, petroleum and construction sectors, the agency says. Moody’s expects continued prudent fiscal management and improved debt sustainability, positive short to medium term growth prospects, greater anticipated resilience to external economic shocks and access to concessional financing to multilateral and bilateral creditors. On the negative side, the government’s balance sheet remains vulnerable to volatility in commodity prices. Positive ratings momentum could be supported by accelerated divestment of government owned enterprises, a reduction in government’s reliance on central bank financing, and deepening of the local currency bond market for government securities. The outlook is positive.
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Davivienda Readies Domestic Issue
Banco Davivienda is set to issue COP400bn-COP600bn ($223m-$335m) in Colombia’s local bond market today. The bank can choose from among a 3-year fixed-rate bullet, and 10-year and 15-year inflation-linked tranches. It plans to use proceeds for the development of its credit business. Davivienda is self-leading the issue, which is rated AAA on a local scale. In June, the Colombian bank saw 6x demand for its first-ever dollar bond, a $500m 5.875% 2022 yielding 5.950%.
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Sodimac Eyes Domestic Issue
Sodimac plans to issue up to COP300bn ($167m) in Colombia’s domestic market August 29. The inflation-linked bonds would have a term of between 5 and 10 years. The home improvement unit of Chilean retailer Falabella plans to use proceeds to refinance debt and pay for expansion plans. Bancolombia and Correval are managing the deal, rated AAA on a local scale.