Mexico’s Banco Compartamos is preparing to issue up to MXP2bn ($151m) in the domestic bond market on August 24. The microlender plans 5-year floating-rate bonds, for its fourth issuance under a MXP6bn program. Bancomer, Banamex and HSBC are managing the sale, rated AAA/AA on a national scale. Compartamos last visited the local bond market in August 2011, when it sold MXP2bn in 2016 domestic bonds at TIIE+85bp.
Category: Regions
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NaFin Close to Domestic Funds
Mexico’s Nacional Financiera, the development bank, is looking to issue up to MXP2bn ($151m) in fixed-rate 10-year notes Wednesday. Banamex and HSBC are managing the transaction, rated AAA on a national scale.
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Colombia Surprises with Rate Cut
Colombia’s central bank cut its reference rate to 5.00% from 5.25% in a move that surprised most forecasters. The central bank references global slowdowns and uncertainty as among the factors influencing the cut, its first since 2010. Most chatter ahead of this meeting suggested a hold was likely for the time being, with mixed views on how long the hold would last. “The majority of market analysts were expecting the bank to leave the policy rate unchanged. We were also expecting the MPC to leave the policy rate unchanged at today’s meeting but had assessed some probability (20%-25%) of a surprise rate cut today given the weak real activity prints released in July,” says Goldman Sachs.
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Fresnillo Shifts Leadership
Jaime Lomelin plans to retire from his position as CEO of Mexican mining company Fresnillo, after 41 years with Penoles and Fresnillo. Octavio Alvidrez, general manager of Penoles’ Madero mine, has been appointed to take his place, effective August 15. Alvidrez came to Penoles in August 1998 and has worked within Penoles and Fresnillo as treasurer, head of investor relations in London and head of procurement. Lomelin, who was CEO of Penoles for 26 years until becoming CEO of Fresnillo in 2008, stays on as a non-executive director with Fresnillo’s board.
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Mexican Plots Local Bonds
Paccar Financial’s Mexican unit is planning to sell 3-year floating rate bonds in Mexico’s domestic market, according to regulatory documents. The truck leasing operation does not specify the timing or size of the sale, which comes under a MXP10bn ($745m) program. BBVA Bancomer and Banamex are managing the deal, rated AAA on a national scale.
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Buyside Sweet on Peruvian HY Bond
Corporacion Azucarera del Peru (Coazucar) has priced $325m in 2022 NC5 bonds as investors filled a book that reached around $4.5bn, demonstrating again that appetite exits for strong LatAm high-yield credits. Coazucar was able to use the scarcity of Peruvian credits in particular to generate significant interest at initial low to mid-7% whispers before ratcheting down pricing to a final 6.5% yield, reminiscent of compatriot Ajecorp’s $300m sale in May. “Coazucar has high margins, low leverage and is a leader in its space,” says a participating New York-based EM portfolio manager. The sugar and ethanol unit of Grupo Gloria priced the senior secured BB/BB+ bond at 99.091 with a 6.375% coupon to yield 6.500%, at the tight end of 6.625%-area guidance, revised from 7.000%-area. The bonds were trading up a point in the grey late Thursday, according to investors. “It looks expensive from whispers of low to mid 7s to revised guidance of 6.625% area, but demand is there for Peruvian corporates,” says a participating London-based portfolio manager. Leads used BB/BB+ beverage distributor Ajecorp’s 2022 NC5 bonds, trading to yield 6.00%, as a direct comp. About 250 accounts participated, according to a banker on the deal, including asset managers, local investors, retail investors, private banking and hedge funds. Coazucar is raising funds to refinance existing debt, to make land purchases and for capital expenditures. The company has an Ebitda margin of 36.8% and net debt to Ebidta of 1.11x. It operates five mills and eight distilleries located in Peru, Ecuador and Argentina, crushing 8.4m tons of sugarcane per year. Bank of America Merrill Lynch and Citi managed the sale. “Investors focus on individual stories and not every high-yield name that emerges, but recent high-yield issuance is encouraging and should encourage more BB issuers,” says a banker away from the deal. It remains to be seen how many more of the region’s borrowers could emerge prior to the annual August vacat
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Colombia Seen Holding Rates
Colombia’s Central Bank is largely expected to hold its reference rate at 5.25% at today’s meeting, though some conversation have revolved around whether it could consider cuts this time. Goldman Sachs sees a probability of less than 20% of what it calls a “25bp rate cut surprise.” It does, though, reference a divided MPC regarding the need for monetary easing. “The balance of views within the MPC is gradually shifting into the dovish camp as there is now a group of 2-3 directors that is concerned with the deteriorating external backdrop (which is expected to remain weak for a prolonged period of time) and emerging evidence of domestic demand slowdown,” it says in a report, adding that the minority group voted for a 25bp rate change in June. Citi says its survey shows an expectation of a 50bp drop in the reference rate by the end of the year.
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Endesa Plans LatAm Streamline
Spain’s Endesa plans to consolidate its LatAm holdings into its Enersis subsidiary, in a transaction structured as an $8.02bn equity capital increase, it says. In an attempt to simplify the structure of the Spanish energy company’s generation, transmission and distribution holdings in the region, Endesa plans to contribute to Enersis the stakes it holds in 13 South American businesses, including subsidiaries of Enersis as well as Endesa subsidiaries not held through Enersis. Other shareholders of Enersis would be invited to subscribe for a matching proportional increase, payable in either cash or by contributing their stakes. The value of Endesa’s position in Enersis was valued at $4.86bn, or 60%, by an independent audit. In addition to simplifying Enersis’ structure, Endesa is looking to reduce in the gap between its Ebitda and net income, as well as reduce dividend leakage within the Enersis group. The operation could also increase the liquidity of Enersis shares, and give it more cash to continue making acquisitions and developing projects in the region. Enersis plans to hold a shareholder meeting on September 13 to approve the plan, which could become the largest capital increase in the country’s history. Enersis’ shares dropped more than 13% Thursday on the news of the plan, with analysts questioning the company’s valuation of the assets and showing concern it might overpay.
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Baja Mining Project Gets Asian Boost
Baja Mining’s Boleo project in Mexico has secured $90m interim financing, it says, from a consortium made up of Korea Resources Corporation, LS-Nikko Copper, Hyundai Hysco, SK Networks and Iljin Materials. The consortium, which took a 30% interest in Boleo in July 2008, raises its stake by 21% when it provides $45m of the $90m. The consortium then has until about August 30 to fund the entire $90m, failing which, its interest would drop back to 30%. If it does commit the $90m, it would have the ablitiy to commit additional funds during a second stage. If the consortium does complete the $90m financing or participate in the second stage, Baja says Boleo’s operations would have to shut down. In the second stage, Baja is able to add a minimum of $10m to its position, up to a maximum of 40%. Canada-based Baja Mining’s only project is Boleo, a copper-cobalt-zinc-manganese project located near Santa Rosalia, in the state of Baja California Sur.
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ProInversion Taps New President
Hector Rodriguez has been named as president of Peru’s ProInversion. The appointment comes after President Milton von Hesse was named Peru’s minister of Agriculture in a cabinet reshuffle. Rodriguez was previously director of investment promotion at the state investment promotion agency.