The outlook on Bolivia’s banking system remains stable, Moody’s says, as sustainable economic growth, decreasing unemployment, and moderate inflation continue to support the banks’ expansion. “Economic stability has improved credit conditions in Bolivia and contributed to record low non-performing loans at the banks in 2011. Banks have also cleaned up their balance sheets of legacy loans from Bolivia’s last financial crisis,” the agency adds. Declining financial dollarization in Bolivia is also helping profitability, liquidity and asset quality at the banks. The favorable conditions are partly offset by the effects of Bolivia’s still sizeable informal economy, and by low investor confidence in the banking system, along with a potentially adverse political environment, all of which may hinder the demand for credit. Moody’s expects Bolivian banks’ asset quality to remain stable.
Category: Regions
AMX Tops 23% Ahead of KPN Tender Close
America Movil (AMX) has raised its stake in Dutch telecom KPN to 23.43%, it says, ahead of today’s close of a tender offer to give it as much as 27.7%. The Mexican telecom launched the public offer for 325m shares in May, looking to increase its beachhead in Europe at an attractive valuation. Despite AMX insisting it does not seek a full takeover, KPN has attempted to thwart the offer. Deutsche Bank is advising AMX. AMX also recently agreed to pay $1bn for a minority stake in Telekom Austria, a move which was welcomed by the target.
Bermuda Breaks out Benchmark
Bermuda has raised $475m in new 2023 bonds, completing its second-ever visit to the international DCM. Despite a Fitch downgrade earlier Tuesday morning, the deal drew demand heard reaching $1.3bn. The Aa2/AA/AA minus rated sovereign priced at par, with a 4.138% coupon, to yield UST+250bp, in line with 250bp-area guidance, which followed previous mid to high-200bp indications. Investors were mainly comping against Bermuda’s 2020 bonds, quoted between 3.19%-3.50% yield. “The deal is just under 100bp wide to the existing 2020 bonds. Good deal, decent story, though it is not a bond that will trade a lot,” says a participating investor. Leads were pinning around 25bp concession, based on a curve-adjusted spread range of 220bp-235bp on the 2020s. Fitch lowered the sovereign to AA from AA+, and this was heard factoring into pricing, as initial whispers late Monday had considered a low to mid 200bp yield. Fitch cited a weaker macroeconomic performance relative to peers, deteriorating fiscal and government debt ratios and lack of credible fiscal consolidation strategy, the agency says. Investors were unmoved by the downgrade, though, noting that the new rating falls in line with other ratings for the sovereign and that Bermuda is still one of the highest rated credits in Latin America. About 75% of the deal was allocated to fund managers, 12% to insurance and pension funds, 10% to private banks and 3% to hedge funds and others. Geographic distribution was 67% US, 30% Europe and 3% Asia. Proceeds will be used to address short-term debt, as well as fund capex and government budgetary purposes. The island nation visited accounts in London, Los Angeles, Boston and New York through Monday. Bermuda’s previous visit to the DCM was its first, raising $500m in 2020 bonds in 2010, at a 5.603% yield.
Italians Considering Brazilian Sale
Brazil’s Primav Construcoes e Comercio has added more detail to its BRL1.76bn ($850m) offer to buy an additional 19% stake in road concession operator EcoRodovias from Italian builder Impregilo, EcoRodovias says. Primav, which is controlled by the Brazilian conglomerate CR Almeida, already owns 45% of Ecorodovias, while Impregilo holds a 29% stake. If Impregilo accepts, its remaining 10% stake in Ecorodovias would be subject to a lock-up period of 2 years. The price tag corresponds to BRL16.59 per share, and is based an average closing price over the previous 6 months plus an 11% premium. EcoRodovias’ shares closed Tuesday at BRL16.11. The offer is still being negotiated and expires on July 13.
Bancolombia Upgraded
Fitch has upgraded Bancolombia to BBB from BBB minus, it says, based on strong performance, solid asset quality metrics and adequate capital. “The bank’s continued expansion within Colombia and into Central and South America deepen its revenue diversification and underpin its revenues while a positive economic background fosters healthy growth,” the agency says. The outlook is stable.
Molymet Talks Price
Molymet is expecting to price a 2017 Mexican domestic bond at about TIIE+80bp, according to a person familiar with the transaction. The Chilean mining company will issue up to MXP2bn ($145m) in the sale, scheduled to price today. Proceeds from the Chilean mining company’s issue are marked for general corporate purposes. Banamex is leading the sale, rated AA+/AA on a national scale.
Ajecorp Expects DCM Follow-up
Peru’s Ajecorp, which issued a $300m 10-year bond in May to 10x demand, could look to do another in about 2 years, says a person familiar with the beverage company’s plans. “The longer maturity for a lower cost creates the perfect scenario for funding,” says the person, adding that given the bond’s success, the board of directors has decided it’s a preferable option for the company’s next 5 years. Bank of America Merrill Lynch led the last deal, with Interbank, Jefferies and Rabobank acting as joint lead managers. The company is also expected to build toward an IPO and will seek to improve its ratings. It issued the bond at a 6.5% yield, and used proceeds to repay debt facilities, and the next transaction is expected to have similar purposes.
Continental Paraguay Pulls Bond on Political Concern
Banco Continental Paraguay has decided against settlement of its $200m 2017 bond priced last week, after the impeachment of President Fernando Lugo caused a secondary market slide. The 8.875% coupon bonds, priced at par last week, were trading at 93.00-94.00 before news broke of the cancellation. “The cancellation is due to a decision by the bookrunners. We will wait until the market settles to revisit the international bond market. The deal was pulled because of political aspects and not because of the financial viability of the bank,” CFO Eduardo Cespedes tells LatinFinance. The official says the bank could revisit the bond market within a few months. S&P placed ratings of multiple Paraguayan banks on credit watch with negative implications, including Continental’s BB minus mark, following a similar rating action on the Republic of Paraguay. “The credit watch listing follows President Fernando Lugo’s recent impeachment and reflects the rising credit risks resulting from the possible political and economic ramifications of the abrupt change in government and the exit of Finance Minister Dionisio Borda,” the agency says.
Bancolombia Defines Domestic Issuance
Bancolombia has advanced the process for issuing up to COP3trn ($1.67bn) local senior and subordinated debt domestic bond issuance. The bank plans to issue debt of 1.5-40 years through multiple sales, it says. They are expected to begin as soon as July if market conditions permit, according to a source familiar with the banks plans. The proceeds would be used for loan growth and portfolio needs, and Bancolombia’s investment banking arm would manage the issuance.
Markets Like Cemex Refi Proposal
Facing some $7.2bn due in 2014 and a difficult global environment with a weak US recovery, Cemex plans to ask lenders for a 3-year extension, it says, a proactive move that analysts and investors are welcoming. At least 60 lenders holding debt from the Mexican Cement maker’s $14bn 2009 financing agreement are scheduled to meet with the company June 29 and July 2 in Madrid and New York. Cemex is proposing a maturity extension from February 2014 to February 2017, an upfront fee and revised margin, a $1bn pay down in 2013, an enhanced guarantor package and revised operational and financial covenants. “If accepted by all creditors, it would postpone nearly $6bn in principal payments from 2014 to 2017. While uncertainty remains large in the global economy now, presumably by 2017 the construction sector would recover, allowing the company either to repay its loans or refinance under easier terms. Today’s announcement does add some certainty,” says Joe Kogan, head of EM strategy at Scotiabank. Cemex says it has discussed the matter with banks holding approximately 50% of the outstanding balance under the refinancing agreement, and expects to make the $1bn payment in 2013 using funds from selected asset sales. Cemex declines to comment on specifics of the proposal. “This is pretty good news with 50% of lenders on board. Cemex is cash positive, but they need more time and we have not had a serious recovery. They are doing things right, though it is not exactly clear what the new funding rate will be or where they will get the $1bn,” says a New-York based EM investor. “Nothing about this is surprising, but the good thing is that this is happening now and not in late 2013.They have already had conversations with creditors and have decided to go forward, so the expectation is that they already have a workable plan that most would accept,” says an EM credit analyst familiar with the company. The extension could allow Cemex to go to the bond market to address bond maturities out