Venezuelan lawmakers have given the sovereign the go ahead to issue VEB71.2bn ($16.6bn) in debt this year, perhaps signaling a transaction is imminent. Already congress had approved a VEB86.9bn debt issuance ceiling for 2012, of which VEB25.8bn would go to service debt and VEB17.2bn to refinance debt outstanding, according to the congressional document. Venezuelan government officials expect an official announcement on the coming sovereign debt issue on Friday, according to a person familiar with the debt discussions. Government officials at the finance ministry could not immediately be reached for comment. As it is, the market is already anticipating that the sovereign will come out with a debt issuance almost immediately. Barclays Capital notes that the approval was earlier than expected and now expect Venezuela to issue a 2029 and/or 2032 with a size of at least $4bn and a coupon a touch below 12%. State oil company Petroleos de Venezuela, which does not require congressional approval to issue debt, is also expected to sell more bonds during a critical election year for President Hugo Chavez. On Wednesday, the sovereign’s benchmark 2027’s stood at 71.25, or 13.8% on a yield basis, and PDVSA’s 2017s traded for 64.5, yielding 14.8%.
Category: Regions
Germans Buy in to MPX
MPX Energia, the Brazilian coal and electricity company controlled by Eike Batista, has sold a 10% position in the company to German utility E.ON for BRL850m ($471.6m). The companies also signed a joint venture agreement to develop renewable energy ventures in Brazil and Chile, MPX says. The deal contemplates a BRL1bn capital increase, of which E.ON will provide BRL850m and shareholders will see an equity offering at BRL55.00 a share. The deal between the new partners has several moving parts. In an initial step, MPX debenture holders will convert their debentures into MPX shares. MPX’s coal assets in Colombia will then be bundled into a new company, CCX, with a BRL814m cash infusion and be spun off. For its part, MPX will bring projects with an 11,000MW capacity into the 50-50 joint venture, including Acu Power projects in Rio de Janeiro, Chile’s Castilla project, the TPP Parnaiba expansion and the Sul and Seiva power plants. E.ON will also retain a call option in the JV to buy an additional 38.9% of the Acu Power venture at book value. Officials at MPX and E.ON could not immediately be reached for additional comment. MPX has long sought to launch an IPO for its Colombian coal mining assets in CCX and many have expected the sale to generate as much as $5bn. Last June, the company issued BRL1.37bn in convertible debentures, of which BRL600m went to BNDES, BRL200m to Gavea, BRL200m to Batista and BRL369m to minority shareholders.
Bimbo Targets 10-Year, Up to $800m Size
Mexican bakery goods company Grupo Bimbo is expected to come with an up to $800m 10-year bond after Moody’s assigned a Baa2 to the proposed issue. This comes as the borrower plans to meet investors in New York today, possibly announcing some more deal details then. It has already visited investors in the Mid-West and the West Coast, and is scheduled to wrap up roadshows in London on January 16. With just one international bond outstanding, the company still trades wide to its US peers as well as to other high-grade Mexican names, and it is thought the company is trying to tighten that differential. Its existing 4.875% 2020s were trading earlier this week at around 4.20%. Bimbo, rated Baa2/BBB/BBB, is now the largest baked-goods company in Mexico and the US after purchasing Sara Lee’s North America fresh bakery business, Moody’s notes. The bond should improve the debt maturity profile on a company that can already boast a strong liquidity position, with free cash flow and existing reserves already covering near-term maturities, the agency adds. As of September 30, 2011, debt-to-Ebitda was 3.3x, while the free cash flow/debt ratio was 14.7%. “We expect credit metrics to improve over the next 18-24 months as Bimbo integrates the operation of Sara Lee’s fresh bakery business and obtains synergies of $150-$200m by year 2013,” the agency says. BBVA, Citi and Santander are managing the 144A/RegS transaction. Bimbo made its cross-border debut in the summer of 2010, when it issued an $800m 2020 at 99.726 with a 4.875% coupon to yield 4.910%, or UST plus 180bp, the tight end of 185bp area guidance. Bank of America Merrill Lynch, Barclays and HSBC managed the sale on that occasion.
Infonavit Preps New RMBS
Mexico’s Infonavit is expected to come to the local market next month with the RMBS bond issuance under a new MXP10bn program. The issuer is planning to issue up to MXP5bn ($367m) in 28-year UDI-denominated bonds backed by Infonavit mortgages with a tentative issuance date of February 8. Proceeds will be used to create new mortgages. Banamex and HSBC will manage the sale, rated AAA on a national scale. Infonavit last issued MXP1.1bn of 2039 bonds at 4.45%, or 264bp over the government’s UDIbonos via Banamex in December 2011.
Koreans Take Stake in Panama Copper Project
The Korea Panama Mining Corporation (KPMC) has agreed to acquire a 20% stake in the Cobre Panama project, currently run by Canada’s Inmet Mining. KPMC, a joint venture between LS-Nikko Copper and the Korean Resources Corporation, acted under an option agreement to acquire the stake for $155m, leaving Inmet in control of 80% of the venture, Inmet says. The acquisition price reflected KPMC’s historical development costs incurred up until the option agreement date and its share of development costs above $150m. Officials at Inmet could not immediately comment on the valuation details of the deal or the potential advisors involved. Following the deal, KPMC will continue to finance its share of the development costs. KPMC and Minera Panama, the owner of the Cobre Panama copper venture, in turn will put together an offtake agreement that will allow KPMC to purchase a 20% share of Minera Panama’s concentrates production.
Mexican Homebuilder Could Lead Huaso Expansion
Mexico’s Corporacion GEO has filed a $100m-equivalent bond shelf in Chile, in a signal that regulatory changes could be working to attract new and more varied foreign issuers into the country’s so-called Huaso market. “We are undertaking this process to open windows to access financing,” Roberto Torres, the homebuilder’s head of capital markets, tells LatinFinance. The credit line registration is for a 10-year UF-denominated bond, with Santander as bookrunner. In Mexico, GEO is unable to issue such lengthy maturities and this has led it to seek out other markets for longer tenors and more attractive funding costs. Though GEO is not yet planning a specific transaction, it sees opportunities available in the Chilean market, and if necessary, could use proceeds from a sale to refinance debt. An issue would be swapped back into MXP. “We are confident that this process [the swap] is simple and accessible,” Torres says. GEO has one BBB Chilean national scale rating, and expects a second. Its rating is BB minus on an international scale. Geo would like longer-term debt, as short-term debt represents 29.1% of its MXP12.7bn total debt. Only 3 Huaso bonds have been issued in Chile – 2 from Mexico’s America Movil and one from Peru’s BCP, but with a reduction in regulatory restrictions last year, it is hoped that more foreign borrowers will be able to feed the country’s growing institutional appetite.
Positive Sentiment Aids Colombian LM Trade
Positive market tone acted as nice springboard for Colombia Tuesday when the sovereign decided to pull the trigger on a retap of its 6.125% 2041s in an effort to raise funding for a cash tender of its outstanding bonds that begins today. In the end, the country was able to upsize its reopening after watching books grow to over $3.6bn in size. Emerging with attractive 200bp area whispers and tightening to 195bp on official guidance, the issuer was able to price at 117.738 to yield 4.964%. The deal is thought to given investors around 20bp-25bp concession to the 170-175bp secondary level seen the day before pricing. “The timing couldn’t be better. Market tone was great and the issuer got a good price for size,” notes a syndicate away from the deal. The bonds had opened at 121 on price basis Tuesday and later dipped to 118 in the aftermarket, according to an investor. This comes as the sovereign readies a cash tender for the purchase of eight series of dollar bonds with maturities ranging from 2013 to 2027 and an outstanding size of $5.87bn. Colombia is offering to pay 110.125 on its 10.75% 2013s, 119.25 on its 8.25% 2014s, 101.875 on its FRNs due 2015, 121.875 for its 8.7% 2016s, 122.875 on its 7.375% 2017s, 158.375 on its 11.75% 2020s, 139.75 on its 8.125% 2024s and 133.00 on its 8.375% 2027s. The offer officially expires on Thursday, but may expire as early as 4:00pm New York time on Wednesday. The sovereign is offering to purchase an aggregate principal amount of bonds that will not exceed $600m or result in an aggregate principal price of more than $750m. HSBC and JPMorgan acted as leads on the bond and dealer managers on the tender.
Continental Sheds Spanish Doubts with Upsized Deal
Peru’s BBVA Continental sold $500m in new bonds Tuesday, upsizing from an expected $300m and defying pushback seen earlier this week. While Continental’s ties to its Spanish parent and the expectations of more bank supply had left some investors expressing doubts about the issue, the deal gained enough moment to generate a healthy $1.8bn book and the participation of some 20 plus accounts. The bond traded at plus 0.70 in the aftermarket, according to an investor. The BBB/BBB plus 144A/RegS bond priced at par to yield 5.75% or UST plus 490.7bp. This comes one day after BBVA Continental emerged with 5.875% area guidance following whispers of 6%. Mainly comped against BBVA’s illiquid 2020 bonds, new issue premium estimates varied widely from 35bp-75bp, with those bonds spotted around 6% pre-announcement. Some investors found the deal priced cheap to its curve, but not relative to similar banks in other countries. Proceeds will be used to fund bank operations. Pricing of the transaction, originally scheduled for Monday, was carried overnight because Spain’s BBVA Group first had to announce a $1.3bn write down of goodwill charges on its US operations on the back of lower-than-expected growth. The BBVA Group says the write-down will not impact cash flow generation or liquidity and will result in a EUR400m positive impact on core capital of the group because of tax treatment of goodwill. BBVA, Goldman Sachs and JPMorgan managed the 144a/RegS transaction. The bank last came to market in November 2010, when it priced a $300m 2020 at 99.220 with a 5.500% coupon to yield 5.603%. S&P recently upgraded Continental to BBB from BBB minus following a similar move for the sovereign last month.
American Tower Continues LatAm Purchases
American Tower, a US telecommunications infrastructure operator, continued its LatAm buying spree after agreeing to acquire 558 telecommunications transmission towers from Telefonica Moviles Chile, with their respective maintenance facilities, for CLP49.2bn ($95.7m). Telefonica Moviles Chile will continue using those facilities for its operations under a leasing agreement signed with American Tower’s local subsidiary ATC Sitios de Chile. Neither American Tower nor Telefonica Moviles could be reached for comment. The Chilean deal comes less than a month after American Tower acquired 2,500 telecom towers in Mexico, in a $500m deal with Pegaso PCS, also a unit of Spain’s Telefonica. The company used its own internal M&A group for the Mexican acquisition and no advisors were hired at the time.
Generator Joins Peruvian Equity Pipeline
Peruvian securities regulators have authorized state-owned power utility Empresa de Generacion Electrica del Sur (Egesur) to publicly list shares on the Lima Stock Exchange, according to an official at the company. He declines to offer details about any specific transaction, and says no advisors have yet been hired. Peru’s market is expected to see more new issuance activity in 2012 provided conditions are benign. Cementos Pacasmayo is preparing a New York follow on, and port operator Andino Investment Holding plans a $60m local IPO pricing January 17.