NR Finance, the Mexican subsidiary of the financing arm of Nissan-Renault, is preparing to raise up to MXP2.5bn ($195m) in the domestic bond markets next month. The up to 4-year bond will pay a spread over TIIE and represents the first issuance from a new MXP13bn program. Proceeds will be used for working capital and refinancing. Banamex and HSBC are managing the sale. NR Finance is rated AAA on national scale. The bonds will be guaranteed by Nissan Motor Acceptance Corporation (NMAC). The issuer was last in the domestic market in July last year when it raised MXP2.5bn through a 3-year paying TIIE+50bp.
Category: Regions
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PDVSA Pays Exxon $252m Compensation
PDVSA has paid ExxonMobil $251.9m as compensation for the assets the global oil major lost to a nationalization campaign in 2007. The payment comes after making some adjustments to the $907.6m figure that the International Chamber of Commerce (ICC) awarded Exxon in its early January ruling, PDVSA says. As agreed, following the ruling, PDVSA planned to discount the amount Exxon owed for the outstanding debt of the nationalized Cerro Negro project in which PDVSA and Exxon worked as partners, an additional $300m that Exxon managed to freeze from PDVSA in a New York account and additional money the tribunal credited to PDVSA’s obligations to Exxon. The ICC ruling fell below the $7bn-$10bn that Exxon originally sought as compensation for its nationalized assets. Despite the payment, however, Exxon has a pending case against Venezuela at ICSID, the arbitration unit of the World Bank. PDVSA has long insisted it would pay only the book value of those assets and not the fair market value that the aggrieved oil companies sought to receive.
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City of BA Postpones Bond Plans
The City of Buenos Aires has postponed the sale of up to $500m in dollar bonds planned for this week on the back of poorer market conditions. Considered a price sensitive issuer, the City was heard interested in pricing the minimum 5-year inside of 10%, but a critical mass of investors were thought to be most comfortable north of 10%. The City’s outstanding 2015 bonds were trading at 9.47% Thursday afternoon, according to an investor. “While there has been some relief in the market, these trades are still considered exceptionally difficult,” says DCM banker away from the deal. With a softer market backdrop following 2-3 days of weakness, investors may have decided to remain on the sidelines. “Investors don’t want to be asked to buy in this market,” notes another DCM banker. Barclays Capital, BTG Pactual and Citi were managing the sale, rated B2/BB. The City was last in the market in April 2010 when it priced a $574m 2015 to yield 12.5%, through Credit Suisse.
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Elektra Enters US with Payday Loan Buy
Mexico’s Elektra has agreed to buy US payday loan company Advance America in a deal valued at $780m including assumed debt. The purchase marks the Grupo Salinas company’s first step into the financial sector in the US, home to a large Mexican community that sends remittances home to low-income households, which also make up the base of Elektra’s customers. Elektra has offered to pay $10.50 per each Advance America share, or $655.6m, a 33% premium over the $7.91 close the day before the announcement. The purchase is being financed using roughly $300m of Elektra’s own cash and $450m from dollar and peso-denominated debt, a spokesman adds. The company raised $150m in a reopening of its 2018 bonds at the end of January, and he says it plans to issue an additional $300m soon. The $780m price tag for Advance America represents an enterprise value to Ebitda multiple of 6.5x, taking the company’s only available Ebitda up to September 2011 of $120m. “Elektra is paying 1.2x the sales of its new subsidiary, a level that appears adequate considering its operations, the potential for synergies, and the strategic position that Elektra now has in the US,” Gaspar Quijano, an analyst at Vector Casa de Bolsa, tells LatinFinance. He describes the move as “surprising but positive.” The deal should not immediately affect Elektra’s ratings says Fitch, which currently rates the Mexican company’s debt at BB minus. That said, Fitch reckons Elektra’s debt leverage would briefly rise to 2.7x before settling back to 2.5x in the short term. Elektra retained Stephens as a financial advisor and Paul, Weiss, Rifkind, Wharton & Garrison as legal counsel in the deal. Wells Fargo Securities and K&L Gates, served as financial and legal advisors to Advance America. Advance America operates 2,248 centers in the US, as well as limited operations in Canada and the UK.
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Mexico Raises MXP25bn in MBono Syndication
Mexico has sold MXP25bn ($1.9bn) in 2022 domestic bonds, marking its first syndicated auction of 2012. The bonds priced at par to yield 6.30%, the lowest yield attained by the federal government in its 10-year syndicated bond auctions, it says. Demand was 1.8x, and the sale was distributed among 36 domestic and foreign institutional investors. Pension and insurance companies comprised 26% of the buyers, banks and brokerage houses 53%, with investment funds 16% and government treasuries 5%. The allocation for foreign investors was 20%. HSBC, Santander and BBVA Bancomer managed the sale.
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Merck Inks Brazilian JV
Global pharmaceutical company Merck has struck a joint venture agreement with Brazil’s Supera Farma Laboratorio, a pharmaceutical firm, for the distribution of generic pharmaceuticals. In the deal, Merck will directly partner with Cristalida and Eurofarma, two of Brazil’s largest pharmaceutical companies and co-owners of Supera, to distribute and promote a portfolio of 30 products, the company says. Merck will control the Super Farma JV with a 51% stake, and the remaining stake held by Cristalida and Eurofarma. The Brazilian partners are giving Merck control in exchange for contributing a number of product brands. Merck officials declined to give more specifics about the deal and could not say how many of the 30 products held by the JV will come from Merck. A spokeswoman does say that the partners expect the JV to reach $500m in sales by 2017.
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Bladex Preps MXP Bond
Banco Latinoamericano de Comercio Exterior (Bladex) is looking to issue up to MXP3bn ($235m) in the Mexican domestic bond market. The bonds will have a tenor of 3-5 years and will pay a spread over TIIE, with tentative pricing scheduled for mid March. Proceeds are destined to fund operations. The issuance is part of a MXP10bn program and represents a debut in the Mexican bond market for the Panama-based LatAm supranational bank which specializes in foreign trade. HSBC and Santander are leading the issuance.
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Findeter Taps Colombian Market
Colombian state-owned development finance agency Findeter has raised COP400bn ($223m) in a domestic bond sale. The value represents an increase from the originally planned COP200bn. A COP104.6bn 1.5-year tranche pays the DTF+1.64%, a COP65.9bn 2-year tranche pays DTF+1.74%, and a COP229.5bn 5-year tranche pays IPC+3.78%. Findeter is rated AAA on a national scale. It previously issued in October, raising COP399bn. Findeter coordinated the offer, aided by a group of local brokerages.
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More Mexican Bottling Mergers on Horizon
More Mexican Coca-Cola bottling acquisitions are on the horizon and perhaps some regional expansions as well. Timing, however, may be later rather than sooner as targets hold out for better pricing. Mexico-based Actinver analyst Karla Peaa expects bottlers Arca Continental and Corporacion del Fuerte could mark the year’s first link-up. This is because the former has a large chunk of Northern Mexico’s market while the latter controls Chihuahua, Sinaloa and Baja California, the other three remaining large markets in the north. “A Continental, Corporacion del Fuerte deal makes the most sense,” Pena notes. “It will provide Continental with a bigger territory while reducing production and transportation expenses.” Fernando Olvera, a Coca -Cola Femsa analyst with BBVA in Mexico City, agrees that an Arca Continental-Fuente combination may be on the cards, but that a deal could take some time to hatch. Fuerte has hinted it will not sell cheaply. “We are definitely going to see more of these deals in Mexico in coming months,” says HSBC analyst Lauren Torres. “There are still many independently run companies willing to sell to gain scale and cut costs amid high commodity prices.” Coca-Cola Femsa, Mexico’s largest bottler of Coca-Cola products, is also likely to make more acquisitions in Mexico to consolidate its domestic lead before pursuing deals elsewhere. Arca Continental’s acquisitions may apply pressure to Femsa to buy or risk losing its market lead. Apart from del Fuerte, other Mexican bottlers up for grabs include Corporacion Rica, Embotelladora de Colima, Yoli de Acapulco, Bepensa, Bebidas Refrescantes de Nogales, and Embotelladora del Nayar The market has already seen Coca-Cola Femsa buy Mexican bottlers Grupo Tampico, Cisma and Queretano for $2bn in total. Recent acquisitions are expected to boost Coca-Cola Femsa’s sales 30% and generate synergies of $60m after the integrations are completed, giving Femsa 53% of the market. Arca Continental, meanwhile, will control
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CABEI Signs $65m Loan With German KfW
The Central American Bank for Economic Integration (CABEI) has signed a 10-year, $65m bilateral loan with German development bank Kreditanstald fur Wiederaufbau (KfW) for renewable energy and regional infrastructure as it relates to green projects. The loan has a 3 year grace period and a competitive interest rate over Libor, says a person familiar with the deal. CABEI and KfW declined to elaborate on the interest rate. KfW has a history of financing development with CABEI since 1969, which over the last 10 years has funded some $400m in small and medium enterprise, renewable energy, infrastructure and health projects, adds a person familiar with the deal.