Mexico’s Credito Real is scheduled to issue a bond of up to MXP500m ($38m) today in the domestic market. The 3-year domestic floating-rate bond had been expected as soon as Wednesday. Proceeds are marked for general corporate purposes. BBVA Bancomer and Banorte-Ixe are leading the deal, rated A/A. In April, S&P upgraded the company’s rating to BB from BB minus globally and to A from A minus on a national scale.
Category: Regions
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Fibra Uno Adds Portfolio
Mexico’s Fibra Uno, a real estate income trust, has agreed to purchase a package of real estate assets totaling MXP11.6bn ($881m), it says. The deal includes the assumption of MXP8.4bn in debt. The package includes 7 commercial complexes, 5 office buildings, 3 industrial properties and the concession to operate a commercial area within a port complex, located in the states of Quintana Roo, Jalisco, Nuevo Leon, Nayarit and Mexico, and in Mexico City. The transaction is expected to close by year-end. Fibra Uno has raised MXP12.5bn in two visits to the capital markets, becoming the first and so far only real estate trust in Mexico.
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Mexico Raises Syndicated Mbono
Mexico has sold MXP30bn ($3.80bn) in 2017 Mbonos through a debt syndication, it says. The 5.0% coupon bonds priced at a discount to yield 4.88%. The 35 international and domestic accounts participating included banks and brokerages (59%), mutual funds (32%), government entities (7%) and pension funds and insurance companies (2%). Overall, international investors accounted for 33%. Banamex, Deutsche Bank and Bank of America Merrill Lynch managed.
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Mixed Results Seen for IPOs
The fate of an IPO for Brazil’s Biosev remained uncertain late Wednesday night, while fellow Brazilian Transmissora Alianca de Energia Eletrica (Taesa) and Mexican Vesta were seeing strong demand for their offerings scheduled to price today, according to people following the sales. Biosev, the sugar, ethanol and bioenergy unit of Louis Dreyfus Commodities, was seeking to raise more than BRL700m ($345m), but had not priced as of late Wednesday night. The deal counted on an approximately 40% participation from its controlling shareholders, but was still needing to get the additional orders needed to reach its target, according to people following the sale. The lead managers declined to comment or were not available for comment on the status of the deal. More information was expected today. Despite any issues with valuation, the issuer is seen as a strong, diversified player likely to emerge as a consolidator in what is a very fragmented sector. Biosev is seeking to sell 41.2m primary shares, with the option of a 15% greenshoe and 20% hot issue, in order to raise funds for its expansion plan and to repay debt. It has 13 plants in operation, with 40m tons of processing capacity and 1,000 megawatts electric generation capacity, and plans to grow in the areas of sugar and ethanol production and energy generation. Bradesco and JPMorgan are global coordinators on the sale, and Banco do Brasil, Banco Votorantim, Itau and Santander are bookrunners. Meanwhile, Taesa was 3x subscribed heading into today’s scheduled pricing and Vesta was also oversubscribed as it pushed back its pricing one day until today, according to people following the transactions.
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Vesta IPO Waits a Day
Mexico’s Corporacion Inmobiliaria Vesta is now set to price its IPO today, pushed back one day from Wednesday at the request of regulators, according to sources following the deal. The industrial real estate specialist’s sale targeting about MXP4bn ($304m) was heard already oversubscribed as of Wednesday afternoon. “This is in many ways a bond proxy, when you have contracts and high occupancy, and strong income,” says an EM investor looking at the deal. He notes that Vesta’s portfolio stands out due to many blue-chip tenants, such as BMW. The deal is also helped by the more bullish view that has taken shape this year regarding Mexico’s growth prospects, particularly regarding the increased investment from the types of manufacturers that use Vesta’s facilities. Vesta is offering 177.2m shares at MXP19.00-MXP21.00 each, meaning a MXP4.08bn sale if priced at the midpoint and a 15% greenshoe is used. The base deal includes 50.7m primary shares to sold in Mexico, 88.6m primary shares to be sold internationally, and 37.9m secondary shares to be sold in Mexico by members of the founding Corona family and other investors. Vesta plans to use 75% of the proceeds for the construction of new projects and the remainder for acquisitions. Credit Suisse and Santander are managing. The developer is in 11 Mexican states and specializes in light manufacturing and distribution facilities.
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Indians Quit Bolivia
India’s Jindal Steel & Power has terminated its $2.1bn contract with the Bolivian government for the El Mutun iron ore project, it says. The exit is prompted by the Bolivian government’s unwillingness to supply 10m cubic meters per day of gas within 180 days of signing the contract to the company’s facilities, as was originally agreed, the company says. Instead, the government offered 2.5m cubic meters a day from 2014. Jindal adds that the government also didn’t accept its request to scale down the investment, given the shortage of gas. It plans to pursue international arbitration. The contract for mining and steelmaking was originally signed in 2007.
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Barbados Slips from Investment Grade
S&P has dropped Barbados from investment grade territory, lowering the island nation to BB+ from BBB minus, it says. “The downgrade reflects our opinion that Barbados’s economic fundamentals continue to weaken. We believe this weakening stems, in part, from rising competitive challenges and other structural factors that the government can address only in the long term,” the agency says. It points to a rising debt burden, off-budget spending, and outstanding contingent liabilities. “We expect Moody’s to follow S&P anytime soon, thereby removing the investment grade rating too,” Citi says. The bank expects GDP growth of 1.0% in 2012 and 1.5% in 2013, and notes that Barbados seems to be moving toward needing more external financing down the road.
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Acciona Wind Farms Aim for Project Bonds
Two units of Spain’s Acciona are set to begin investor meetings this week ahead of what bankers and analysts say would be LatAm’s first wind energy project bonds. Looking to replace debt initially done in the loan market, the BBB minus rated Oaxaca II and Oaxaca IV projects are seeking respective $164.5m and $167.5m 2031 bonds with an average life of 13 years, according to sources familiar with the process. The key for moving funding away from the bank market is the operating projects’ lack of construction risk, as well a strong track record for wind generation nearby, most notably the Eurus facility also developed by Acciona. “This model has been used in many locations around the world,” Alberto Santos, analyst at Fitch, tells LatinFinance, including the US and Europe. He says the issuers’ investment grade rating reflects the location, proven technology and Acciona’s international status. In addition to being the region’s first wind project bond, he notes it is also unusual to have two separate transactions for a pair of wind farms that are nearly identical. The most recent comparable transaction, bankers say, might be a US solar power bond closed in February. Berkshire Hathaway-sponsored Topaz Solar’s $850m BBB minus rated 5.75% 2039 bond now trades inside of 5.50%. That the CFE is locked into a 20-year power purchase agreement is another strength of the Oaxaca deal, Fitch notes. Bankers suggest pricing should be viewed as a spread to CFE, just as the recent Brazilian drillship project bonds were viewed as paying spreads to Petrobras. “Financing construction in the bank market and replacing it later in the bond market is a template we should see more of,” says a banker on the deal. This has already been done with other assets, such as the drillships, he notes, and makes sense given the limitations on bank funding in recent years. The Oaxaca roadshow begins today in Boston, and visits New York, Chicago and Los Angeles through July 24, with additional meetings pos
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Peru Sugar Exporter to Meet Investors
Corporacion Azucarera del Peru (Coazucar) is scheduled to start meeting investors Thursday ahead of a possible cross-border bond debut. The sugar and ethanol unit of Grupo Gloria is to begin in London and Santiago, and visit Switzerland, Lima, Miami, Boston and Bogota, before finishing in Los Angeles July 25. A BB/BB+2022 bond is expected to follow. Bank of America Merrill Lynch and Citi are managing the process. A deal would offer a test for high-yield corporate appetite in the region. Mexico’s ICA (B1/BB minus) is expected to complete a roadshow today, though it is unclear if the builder plans a transaction. A sale from either would be the first non-financial corporate high-yield sale since Inmet Mining in early May. Coazucar operates 5 mills and 8 distilleries located in Peru, Ecuador and Argentina, crushing 8.4m tons of sugarcane per year.
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Issuers Set to Test IPO Market
Two IPOs scheduled for today kick off a string of transactions expected to be the last equity new-issue activity before the traditional August hiatus. Louis Dreyfus Commodities’ Biosev is targeting more than BRL750m ($371m). The Brazilian is offering 41.2m primary shares at BRL16.50-BRL20.50 each, meaning a BRL877m size if done at the midpoint and a 15% greenshoe is used. Raising funds for its expansion plan and to repay debt, Biosev is expected to count on significant participation from its controlling shareholder in the deal. Bradesco and JPMorgan are global coordinators on the sale, and Banco do Brasil, Banco Votorantim, Itau and Santander are bookrunners. Mexico’s Corporacion Inmobiliaria Vesta is also testing the waters, selling 177.2m shares at MXP19.00-MXP21.00, meaning a MXP4.08bn sale at the midpoint and if a 15% greenshoe is used. Vesta plans to use 75% of the proceeds for construction of new projects and the remainder for acquisitions. Credit Suisse and Santander are managing. Thursday brings the largest of the pack, Brazil’s Transmissora Alianca de Energia Eletrica (Taesa), which is also the sale that investors and ECM bankers give the best chance of success. The Cemig-controlled transmission company’s “re-IPO” offers 20m units at BRL60.00-BRL70.00 each. This would indicate a BRL1.50bn sale if priced at the midpoint and a 15% greenshoe is exercised. The proceeds will be used for investments and expansion. Bank of America Merrill Lynch, BTG Pactual, Banco do Brasil, Goldman Sachs and Santander are managing the sale. Finally, Chile’s Inversiones La Construccion (ILC) should emerge Friday morning with pricing on an approximately $500m-equivalent IPO. The investment arm of Camara Chilena de la Construccion is offering 3.7m primary shares and 28.5m secondary shares. ILC is raising funds to capitalize its health care operations and for organic growth and acquisitions. Bank of America Merrill Lynch, IMTrust and JPMorgan are managing the sale, which includes bot