Mexico’s Credito Real plans to raise up to MXP1bn ($76m) in the domestic bond market. The proposed 3-year notes, rated A minus on a national scale, will pay a spread over TIIE. The notes are part of a MXP2.5bn program and have a preliminary pricing schedule of the third week of February. Proceeds will be used to refinance debt. BBVA Bancomer is leading the transaction. Credito Real last issued MXP400m in 3-year floating rate notes in November at TIIE +325bp, which were partially guaranteed by Nacional Financiera and Banco Interamericano de Desarrollo.
Category: Regions
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Vitro Navigates Challenges to Restructuring
The US Court of Appeals for the Fifth Circuit has denied the seventh attempt by bondholders to undo Vitro’s Chapter 15 bankruptcy filing, another indication that the Mexican glassmaker is set to successfully restructure its debt. Vitro insists that the bankruptcy and restructuring process is being conducted in Mexico and that any legal challenges in the US will be futile. “We should note that 95% of the company’s assets are in Mexico. These bond holders have a strategy to make the process harder,” a company spokesman says. Investors have made several attempts to seize the company’s US assets, but have failed to get at them so far. In its approach to restructuring its obligations, the glassmaker has used roughly $1.9bn in intercompany debt to give itself enough voting power to approve what has been largely an unpopular restructuring plan for other creditors. As it stands, the company’s restructuring proposal includes $814.7m in new 2019 bonds, a fee of up to $32.7m and mandatory convertible debt of $95.8m. JPMorgan has estimated that creditors who accept the deal may recover between 48 and 60 cents on the dollar, depending on the level of debtholder support. Last June, Vitro sold a number of assets held by its US subsidiary Vitro America to American Glass Enterprises for $55m, further reducing what bondholders could seize, and it has also sought to sell other remaining assets to US private equity firm Grey Mountain Partners. So far, the Mexican company has managed to push through its plan, but analysts and investors point out that, if successful, the debt restructuring could make it harder or more expensive for other Mexican companies to access to international credit markets.
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JBS USA Beefs up New Bond
JBS USA has priced a $700m 8-year NC3 bond Wednesday, upsizing from an original $400m. The US subsidiary of the Brazilian meatpacker priced the notes at 98.569 with 8.25% coupon to yield 8.50%, in line with 8.50%-8.75% guidance. Proceeds will be used to repay debt at the parent level, after a transfer through intercompany loans. JBS’s 2018s were trading at 96.00 in price on the bid side Wednesday versus a 92.00 bid seen a week ago, says one banker following the deal. Banco do Brasil, JPMorgan, Santander, Rabobank and Wells Fargo managed the sale, rated B1/BB.
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Gaming Co Preps Bond
Codere Finance has launched a roadshow ahead of a possible $250m, 2019 NC3 bond, with breakfast meetings scheduled in London today and the US roadshow to follow. Credit Suisse, Barclays and Itau are managing. The Spanish-based gambling group with significant LatAm operations is raising funds for the purchase of an additional 35.8% stake in Mexico’s Corporacion Interamericana de Entretenimiento. Codere Mexican Mexican unit agreed in August to buy the stake for MXP2.68bn ($217m). Codere has operated in Mexico for 13 years and also operates in Argentina, Brazil, Colombia, Panama and Uruguay.
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Peru Tests Local Currency Appetite
Peru marked a number of firsts Wednesday after raising $1.1bn equivalent through a dual-tranche bond reopening that generated more than $7bn in orders and tested international appetite for local currency bonds. Absent from the market since 2010 and yet to test drive its new BBB ratings acquired late last year, Peru saw an opportunity to raise funding in a low interest rate environment before European growth concerns began to weigh on sentiment. In this year’s inaugural global local currency trade, the Andean nation reopened its 6.950% 2031 global PES bonds for the equivalent of $600m. It also raised another $500m through a reopening of its 5.625% 2050 USD bonds. The 2050 reopened at 104.098 to yield 5.372%, or UST plus 225bp, inside of 235bp area guidance. This meant a 5bp-10bp concession against a 5.1% yield before announcement, according to bankers on the deal. The PES issue reopened at 100.956 to yield 6.875%, inside of 7.000% area guidance, or what some saw as close to a 30bp concession against a 6.55%- 6.60% secondary yield previously seen for the 2031s. However, a banker away from the deal calculated a 7bp-8bp concession against pre-announcement 2050 levels of 217bp on a spread basis and 17bp on the PES tranche pre-announcement yield of 6.70%. “It couldn’t have gone better,” says the banker away from the deal. The 2050 bonds were trading at 105.0 in the grey Wednesday afternoon, according to an investor. Peru built a $4.1bn order book for the USD tranche with 110 accounts participating and a $3.0bn equivalent book on the PES tranche with participation from 65 investors. Opportunities to participate in PES denominated trades are few and far between and for those investors who err on the side of caution, Peru’s currency offers less volatility than most, albeit with less FX upside. Fund managers and pension funds comprised the bulk of investors with some insurance and hedge fund participation. Citi and Deutsche Bank managed the sale. Peru is rated BBB/BBB/Baa3. T
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Aval Lands Debut Debt Deal
Colombia’s Grupo Aval priced a $600m 5-year bond Wednesday, its debut in the international bond market. The Colombian holding company priced the bond at 99.458 to yield 5.375% with a 5.25% coupon, tight to 5.5% area guidance and nicely inside earlier 5.5%-5.75% whispers. Book size reached north of $4.5bn in demand. The debut issuer was being comped against its own Banco de Bogota banking unit, which priced in December a $600m 5.0% 2016 bond to yield 5.25% and was trading at around 4.9% area Wednesday. Also, given Aval’s holdco status, investors had been asking for a premium over Banco de Bogota, with some looking at Bancolombia subordinated 2020s as a possible starting point. Those subordinated bonds were recently trading at around 5.75% bid, while Bancolombia’s 2017s were being quoted at around 4.9%. “The deal was attractive versus other banks,” says one participating portfolio manager. The bonds traded up 1 point in the grey Wednesday afternoon. JPMorgan and Goldman Sachs managed the sale, rated Baa3/BBB minus.
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Urbi Whispers on New 10-Year
Urbi Desarrollos Urbanos (Urbi) is heard whispering low to mid 10s for a new $300m plus 10-year NC5 bond. The Ba3/BB minus Mexican homebuilder is expected to price this week, with roadshows scheduled to end today in London and Los Angeles. Talk comes wide to peer Homex which has a 2020 trading at around 9.60%. However, it comes inside the likes of weaker homebuilding names like GEO and Javer, which have 2021s trading at around 11.48% and 12.22%, respectively. Meanwhile, Urbi’s outstanding 2020s have recently been trading as tight as 9.5%. Moody’s highlights Urbi’s robust liquidity position and conservative capital structure as it assigns a Ba3 rating to the proposed senior unsecured issue. Credit challenges include the company’ exposure to high-middle and upper income sectors that have had restricted access to financing, it adds. On September 30, 2011, the company reported assets worth about MXP42.8bn ($3.3bn), according to Moody’s.
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Ternium Unveils Terms for Retail Syndication
Ternium Investments has launched into retail syndication a $700m, 5-year amortizing senior unsecured loan, offering banks a margin of Libor+337.5bp. Upfront fees are 87.5bp for $75m commitments, 62.5bp for $50m tickets and 50bp for $25m. The loan was originally funded and closed among bookrunners at the beginning of the month. Proceeds went to help cover the steelmaker’s portion of a purchase of 27.7% in Brazilian steelmaker Usiminas, agreed in November. In the BRL5.03bn ($2.8bn) deal, Ternium acquired 84.7m common shares, its Siderar unit 30m and fellow Techint Group company TenarisConfab 25m. TenarisConfab has also secured a $350m 5-year loan through HSBC, and is expected to pay Libor plus 175bp-250bp. On the Ternium loan, Citi, Credit Agricole, HSBC and JPMorgan are global coordinators and, along with Santander, they are also acting as joint bookrunners.
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Camposol Tests with Low Double Digits
Peru’s Camposol is out with low-10% whispers on an expected $125m 5-year non-call 3 bond, as roadshows wrap up today in Los Angeles. Pricing is slated for this week. Leads are heard comping the food exporter against Peruvian fishmeal exporter Corporacion Pesquera Inca (Copeinca), which has an outstanding $175m 9% 2017 trading around 7.5% on a yield basis. 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. The 144A/Reg S senior unsecured notes are rated B3/B. Credit Suisse and Santander are leads. 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.
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Davivenda Snaps up HSBC’s CentAm Assets
HSBC has sold operations in 3 Central American countries to Colombia’s Davivienda for $801m, as the global bank continues to cut back in LatAm The move also marks a big step for Colombia’s largest bank in its ambitious expansion plans abroad, allowing it to grow some 20%. In the all-cash deal, Davivienda takes over HSBC’s retail, corporate, commercial and insurance businesses in Costa Rica, El Salvador and Honduras, a network of 136 branches. As of September, these businesses represented $4.3bn in assets, with $2.6bn in loans, $3bn in deposits and insurance premiums of $42m. Also operating in Panama and Miami, the Colombian bank has been assembling a war chest with the expressed intent to expand in Peru, Chile and Central America. The bank raised $375m-equivalent in a local equity follow on last year, and is considering a New York equity listing and a possible 144a bond debut this year. The deal came in at 1.4x price to book and a price to earnings ratio of 45x, says David Pelaez, an analyst with Bolsa y Renta. This means the transaction fell below the average 3x price to book seen on deals in Colombia over the past year, according to Bolsa y Renta. The transaction had been in the works for some time, as HSBC has sought to divest assets in the region including a still pending sale of its property and casualty insurance business in Argentina and Mexico. Officials at HSBC would not comment on the CentAm sale or their other pending deals. Davivienda officials could not immediately comment further. HSBC’s own investment banking arm advised it on the deal, and UBS advised Davivienda. Last year, HSBC began searching for potential buyers for three separate blocks of LatAm assets. This included its property and casualty insurance business in Mexico and Argentina for a price tage of roughly $1bn, according to people with knowledge of the plans, as well as its Central American banking units and its consumer finance arm in Brazil. Last month, Brazil’s Bradesco expressed intere