Pemex has made a return to the bond markets to raise a $1.75bn 2044 bond, getting $6.5bn in demand and one of the lowest-ever coupons for a long-dated LatAm corporate bond. In a tricky market open to the region’s highest-rated issuers, the Baa1/BBB senior unsecured bond priced at 99.552 with a 5.50% coupon, to yield 5.53%, or UST+280bp, at the tight end of UST+285bp-area (+/- 5bp) guidance that followed UST+295bp whispers. “It is a very good sign that Pemex came to market with good reception, especially amid uncertainty in the market,” says a California-based EM investor. The state-owned oil-producer was heard offering a 5bp concession against its 2041 bonds, which were spotted by bankers and investors at 270bp pre-announcement with 5bp calculated for the curve extension. The bonds were trading up 0.50-0.75 points in the grey, according to investors. “Politically, it is a good thing for Pemex to issue ahead of the elections,” notes a participating New York-based senior portfolio manager who expects a victory by Enrique Pena Nieto, a candidate who has called for reform at Pemex. “Despite tightening, we saw some value from Pemex in the current market from a solid credit. We’re cautiously optimistic about reforms to the sector which are long overdue and badly needed. It should be a positive catalyst for the sector and Mexican economy,” adds another participating EM portfolio manager. Some 315 accounts participated, with 80% coming from the US, 15% from Europe and 5% between LatAm and Asia. The issuer received approval to upsize from 1.5bn to accommodate demanded. The Luxembourg-listed bonds are guaranteed by Pemex-Exploracion y Produccion, Pemex Refinacion and Pemex-Gas y Petroquimica Basica. Barclays, JPMorgan and Santander managed the sale. Pemex held a non-deal European roadshow in May, a month after it became the region’s first credit to issue in Australian dollars through a AUD150m ($156m) 5-year sale.
Category: Regions
Fench Food Group Adds in Mexico
French food services group Sodexo has agreed to acquire Mexican food, meal voucher and card company Servi-Bonos for EUR60m ($75m), it says. The buy will be financed out of the company’s existing cash balance and undrawn credit facilities. It is made by Sodexo’s motivation solutions business, one of the company’s main areas, which includes vouchers, cards and checks for food, restaurant meals, culture and transport. Company officials were unable to comment on the advisors used. The purchase is subject to regulatory approvals. It follows the acquisition of on-site food services and corporate meal voucher system company Puras do Brasil for EUR525m last year.
Argentina Mine Changes Hands
Canada’s Yamana has agreed to acquire Argentina-focused mining company Extorre Gold Mines, in a deal valued at approximately CAD395m ($385m), it says. The transaction gives Yamana the Cerro Moro gold and silver project, located in Argentina’s Santa Cruz province. Extorre shareholders are to receive CAD4.26 per share – CAD3.50 in cash and 0.0467 of a Yamana common share – for each Extorre common share they own. The price represents a 54% premium to Extorre’s 20-day volume-weighted average price. Though the buy represents only 3% of Yamana’s market capitalization, it could contribute to a multiple of that in cash flow growth, the company says. Extorre says it pursued a sale after a decline in gold mining shares, economic uncertainty and the situation in Argentina meant financing Cerro Moro on its own became too expensive. Yamana was advised by Barclays Capital and CIBC World Markets, and Extorre was advised by Canaccord Genuity. The agreement includes a CAD15m breakup fee. Yamana operates in Brazil, Argentina, Chile, Mexico and Colombia.
Fovissste Set for RMBS Issuance
Mexico’s government housing agency Fovissste plans to raise MXP5.28bn ($381m) through a domestic RMBS sale, and is targeting a Thursday pricing. The sale is expected to price in line with previous issuances. The 30-year bond would be denominated in UDIs and pay a fixed rate. BBVA Bancomer and Banorte-IXE are managing the sale, rated AAA on a national scale. The government-backed lender last visited the market in March, raising MXP4.06bn in 2041 notes paying 4.65%.
Grupo Kuo Talks MXP Price
Mexico’s Grupo Kuo is expected to price a MXP1bn ($72m) 2019 domestic bond at around TIIE+200bp, according to market participants. The sale is scheduled for Thursday. Ixe is managing the transaction, rated A on a national scale. In 2010, Kuo priced a MXP700m 2015 bond at TIIE+260bp through IXE and Banorte. The group has holdings in the consumer goods, chemical and automotive industries.
JPM Sends Funds to Mexico
JPMorgan has made a $250m capital increase to its Mexican subsidiaries, it says. The sum, funded to JPMorgan Grupo Financiero, will allow the global financial institution to provide additional lending capital to its Mexican customers. It represents a 62% capital increase, and brings the firm’s total capital in Mexico to approximately $653m.
Penoles Nears Domestic USD Bond
Mexican mining conglomerate Penoles is preparing to sell around $200m in 2022 dollar-denominated bonds in Mexico’s domestic market on Wednesday. Seeking to match liabilities with dollar cash flows, the miner plans to use proceeds to fund expansion and cost reduction projects as well as for general corporate purposes, says Moody’s, which assigns a national scale Aa1 rating. The notes will be guaranteed by the company’s principal subsidiaries, excluding Fresnillo, the agency adds. Banamex, BBVA Bancomer and Santander are managing the deal, rated Aa1/AAA on a national scale. The Mexican miner last sold $530m in dollar-denominated bonds in Mexico’s domestic market in September 2010, pricing a $400m 10-year tranche 5.15%, and a $130m 2015 at Libor+178bp.
Slim Continues European March
Mexico’s America Movil (AMX) is set to pay around $1bn for a minority stake in Telekom Austria (TA), the company’s second large move in Europe this year. Continuing to scoop up assets on the cheap, AMX has agreed to buy 21% in the Austrian telecom from two private investors, and will own 23%. Financial terms were not disclosed, but the stake would be worth about EUR748m ($945m) at the previous day’s EUR8.04 closing price, with some estimates seeing a premium that would place the price tag as high as EUR880m. Shares closed Friday at EUR8.15. “This makes sense for AMX and is the right way to grow – access to core European countries. The exposure to TA provides further upside over Western Europe and could allow AMX to use its expertise in emerging markets to improve operations in the region,” says a European telecom equity analyst, noting AMX has wanted into Europe for some time, but it has always been an issue of price. AMX likely wants to test the waters first and learn from the European market before engaging in a possible larger stake, the analyst adds. “Critics say the European and LatAm models are different and valuations are not very good, but these guys are savvy. AMX has bought everything on this [LatAm] side of the world and volatility is not going to stop the use of cash flow for consumption of cellular and data in other parts of the world,” says a New York-based banker who has worked with AMX. “It remains to be seen what Carlos Slim’s strategy is and how active he wants to manage. The issue with TA is that it is a government owned entity and revenues are under pressure. If his approach is cost cutting it will be difficult because TA has civil servants with protected rights and it will be difficult to fire employees as a method of cost cutting,” says a second telecom analyst. “We welcome America Movil as an investor. America Movil is one of the most successful telecom operators and providers worldwide and we are glad to have a strategic and long-term investo
Daimler Preps MXP Bond
Daimler Mexico is planning to issue up to MXP 1bn ($72m) in 2 or 3-year floating rate domestic bonds on Tuesday. The car manufacturer’s notes come with a guarantee from the German-based parent. BBVA Bancomer and Banamex are managing the sale, rated AAA on a national scale. Daimler last came to market in September, when it priced a MXP1bn 3-year bond at TIIE+50bp.
PPK Joins Biodiesel Board
Pedro Pablo Kuczynski has joined the board of Pure Biofuels, the company says. The US firm operating entirely in Peru adds the former finance minister and prime minister as it “embarks on an aggressive and domestic and international growth strategy.” Pure Biofuels last month was acquired by a Pegasus Capital Advisors-affiliated investment fund.