Colombia’s Central Bank is expected to again hold the country’s benchmark interest rate at 4.75% when it meets today. Bank of America Merrill Lynch, one of the shops calling for a continued pause today, sees a 50bp raise over the course of 2012.
Category: Regions
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Urbi Upsizes on Bid for Yield
Mexico’s Urbi Desarrollos Urbanos sold $500m in new 10-year non-call five bonds Friday, upsizing from a minimum $300m on the back of $2.5bn in demand from over 170 accounts. The Mexican homebuilder, rated Ba3/BB minus, priced at 98.442 with a 9.75% coupon to yield 10%, as investor appetite for a higher yielding instruments allowed it to squeeze levels tighter from initial talk of 10.25% area to final revised guidance of 10%-10.125%.“The credit did very well in a market that is receptive to high yield names,” says a DCM banker away from the deal. Even then, final pricing offered a nice pick-up to Urbi’s 9.5% 2020s, which now only have an 8-year tenor but were trading as tight as 9.10% last Thursday after actually rallying last week. “With the outstanding 2020s trading at 9% area, this is attractively priced,” says one EM portfolio manager following the name. Another investor found Urbi fairly priced and to be one of the best credits in this sector, but still opted out because he found more value in Javer. “We could have the new Urbi bonds for 10% or buy Javer 2021s for 12%, though more levered,” the investor says. Credit Suisse, Citi and Santander managed the sale.
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Mitsubishi Buys Brazilian Grain Stake
Mitsubishi has agreed to purchase a 20% stake in Grupo Los Grobo’s Ceagro do Brasil unit, one of Latin America’s top grain producers, for about JPY3.5bn ($45.61m).
Recently appointed Ceagro CFO Antonio Oliva Neto tells LatinFinance that the deal brings important synergies to the business. Ceagro focuses on financing producers, production, storage and supplying the local market, while Mitshubishi is active across the value chain from ports right down to the final consumer through supermarkets and fast food chains. “Ceagro will benefit from new business opportunities and be able to reach new markets,” he says. Mitsubishi is expected to purchase the stake through a capital increase. Ceagro currently operates in Brazil, Argentina, Uruguay and Paraguay and seeks to leverage the Mitsubishi deal to become a centralized grain originator in the countryside and also to export grain to new destinations. Ceagro officials declined to offer any additional details of the transactions. Officials at Mitsubishi could not immediately be reached for comment. Mitsubishi has been an active participant in the agricultural business in Latin America. Last year, the Japanese company had a hand in exporting more than 10m tons of grain from the USA, Brazil, Argentina and Australia to its customers in several Asian countries.
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Camposol Plants Flag in Credit Market
Peru’s Camposol priced a $125m 5NC3 bond Thursday, landing its debut in the international bond market. The asparagus exporter and avocado producer priced the bond at 99.517 to yield 10% with a 9.875% coupon, inside 10.125% area guidance and earlier low 10s whispers. Some investors were put off by the deal’s small size at a time when liquidity remains a priority among the buyside, but overall leads were able to generate decent demand which reached $250m ahead of pricing. “We wanted to strengthen our name in the international bond market and decided to start with a smaller size,” Camposol’s CFO Jorge Ramirez tells LatinFinance. He added the company could potentially revisit the debt capital markets with a bigger size in about 4 years time. Though difficult to comp, leads were heard looking at Brazilian agricultural services company Ceagro which has a 10.75% 2016 bond yielding 11.5%. Proceeds are going to repay about $80m in debt and fund capex. The bond carries a change of control put at 101 as well as an equity clawback that will allow the issuer to redeem up 35% of the bond with one or more equity offerings during the first 3 years. Camposol is involved in the cultivation, processing and commercialization of agricultural products such as asparagus, peppers, avocados, mangos and grapes. It claims to be the world’s largest asparagus exporter and close to becoming the world’s largest avocado producer, according to its website. The 144A/Reg S senior unsecured notes are rated B3/B. Credit Suisse and Santander led the transaction with Scotia Capital as co-manager. The bonds had jumped to 101.25 in price Thursday.
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Cofide Dusts off Bond Plans
Peru’s government development bank Cofide will begin roadshows today for its long-awaited $500m 10-year bond. Meetings will start in Santiago. The borrower will then head to Los Angeles and London, and finish in New York and Boston on Tuesday. The deal has been on the backburner since Ollanta Humala’s victory in the June presidential elections left investors uncertain about which direction the populist politician would steer the economy. Now with those concerns somewhat assuaged, Cofide is ready to move forward after completing talks with auditors. Deutsche Bank and JPMorgan have been mandated on the 144a/RegS trade, expected to come with a BBB rating.
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Volcan Mines Debut Deal
Peru’s Volcan Compania Minera priced a $600m 10-year bond Thursday, its debut in the international bond market. The Peruvian mining bond came at par to yield 5.375% after revising guidance from 5.625% to 5.5% area, well inside initial 5.75% whispers. Books reached around $4.5bn in demand. Southern Copper was thought to be the closest comp, though there were ratings differentials, not to mention Volcan’s smaller size. With Southern Copper’s 2020s trading at 4%, investors saw Volcan coming with a 50bp-60bp premium to its larger peer. One participating investor, however, calculated an 80bp differential between an interpolated 260bp spread on Southern Copper’s existing bonds and Volcan’s 343bp level. Investors were also drawn by the credit’s upside potential. “Volcan has substantial upside and given that 25% of the land is under development, that shows it can be a much stronger credit than it is now,” adds a second participating portfolio manager. Participation came from US (50%), Europe (30%) and LatAm (20%). Proceeds are expected to be used to finance energy projects. The borrower is involved in the extraction, concentration, treatment and commercialization of polymetallic ores such as zinc, lead, and silver. The bonds traded up 1 point in the grey Wednesday.
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Fund of Funds Marks First in CCD Market
AGC Controladora, a private equity manager affiliated with US-based Northgate Capital, has filed for a certificado de capital de desarollo (CCD) transaction in Mexico’s domestic market. The transaction is being called the first fund of funds in the CCD market, though it will be able to make direct investments in Mexican companies in addition to other PE funds. The private equity firm plans to raise up to MXP13bn through a 10-year fund, but is initially seeking MXP2.6bn, plus future capital calls. Regulators decision last year to allow capital calls in CCDS ended a debate that had slowed issuance for the 2-year-old asset class. Bankers are now optimistic that CCD market will resume activity at a healthier pace. The ACG fund plans to invest in a variety of sectors, but return structure varies somewhat from most PE fund-based CCDs. Investors receive their initial investment plus a preferred return equivalent to the Mexican Bolsa’s plus 500bp, before the managers take a 5% cut, with any remaining funds being divided between investors (95%) and managers (5%).Vector is managing the sale. AGC targets a closing of March 14, according to the documents, though CCD closings typically lag initial filings by several months.
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Urbi Targets Low 10s
Urbi Desarrollos Urbanos (Urbi) is aiming for a 10.25% area yield on a new $300m 10-year NC5 bond, expected to price today. The Ba3/BB minus Mexican homebuilder was scheduled to finish a roadshow Thursday. Talk is wide to peer Homex, which has a 2020 trading at around 9.60%. The issuer’s outstanding 2020s have recently been trading as tight as 9.5%. BBVA, Credit Suisse, Citi and Santander are managing the sale.
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Pemex Settles Differences with Repsol
Pemex has agreed to work with the management of Spain’s Repsol and to keep its ownership stake in the company. The more cooperative stance marks major turnaround for the Mexican state-owned oil company, which up until now had sought to build alliances with other shareholders to revamp management at the Spanish firm. The companies are putting together a 10-year cooperation agreement that will involve working jointly in business opportunities that arise in the upstream, downstream and LNG sectors in the Americas, as well as the downstream business in Spain and Portugal, Pemex says. In Mexico, executives from both companies will evaluate and promote joint business opportunities as well. In turn, the Mexican state oil company has agreed to maintain a stake in Repsol of anywhere between 5% and 10%, and to “support the strategic plan and structure of the current Repsol management,” Pemex notes in a statement. It currently holds a 9.5% stake in Repsol. Pemex increased its stake to 9.5% last year and struck a failed agreement with Spanish builder Sacyr-Vallehermoso, another Repsol shareholder, to force a change in Repsol’s top brass. Pemex even considered spending an additional EUR854.3m to up its Repsol stake to 12.5%, and gain a greater say in the company. The deal fell apart, however, when the cash-strapped Sacyr was forced to sell half of its 20% stake back to Repsol in late 2011. “For the moment Pemex is not considering reducing its Repsol stake. We’ve put a 5% floor as a way to give us some room to maneuver but nothing more,” a spokeswoman says. Although the Mexican oil company enjoys generous after tax cash flows, the Mexican government’s tax take is considerable and the company struggles with lower oil reserve replacement and higher leverage than its international competitors.
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Cabcorp Starts Investor Meetings
The Central American Bottling Corporation (Cabcorp) launched investor meetings Thursday in London and Santiago, and will head to Boston, Los Angeles and the US West Coast before finishing in New York on Wednesday. The Guatemala-based anchor bottler for Pepsi in Central America has been heard looking to raise $150m in the international bond markets. Citi is sole manager on the possible deal, rated Ba2/BB/BB+. Cabcorp is controlled by the Castillo family, with Pepsico holding an 18% stake. Cabcorp expanded into the Caribbean in 2009 when it bought PepsiAmericas and its territories in Puerto Rico, Jamaica and Trinidad. As of September 30, 2011, short-term maturities only amounted to $19m, versus $85m of cash on hand, according to Moody’s.