Mexico’s anti-trust regulator has opened a window of opportunity for the potential approval of Televisa’s $1.6bn acquisition of a 50% stake in wireless provider Iusacell after saying it would reconsider its decision to block the transaction. “If the companies present agreements that resolve some of the competition problems” in the television advertising market that would result from the tie up, regulator (Cofeco) said it would authorize the merger. The announcement came just days after the regulatory agency officials voted 3-2 in favor of blocking the merger arguing that an incentive would exist to fix advertising rates. Iusacell is owned by billionaire Ricardo Salinas Pliego, who also controls TV Azteca, the second largest broadcaster in the country after Televisa. Iusacell’s deal with Televisa is seen as part of the company’s strategy he company to build its strength to compete with corporate titan Carlos Slim who controls roughly 70% of the telecom business in the country. In the acquisition as structured, Televisa has invested $37.5m in Iuscacell equity, and another $1.565bn in Iusacell convertible debt paying 2% with a December 2015 conversion date. Iusacell, Mexico’s third largest cellular services company, has already begun using the invested funds. At the time of the transaction, Barclays estimated the deal came in at a pricey 21x EV/Ebitda multiple, using Iusacell’s 2009 Ebitda of $150m. The Televisa’s ADRs remained unchanged on Tuesday at $19.88 following the regulatory announcement.
Category: Regions
Investors Push on Caucedo Pricing
Dominican port terminal Caucedo is heard delaying its $180m 2022 after the borrower adjusted the collateral package on the bond and failed to agree on price levels with investors. Some anchors may still be on board, and leads are expected to clarify in coming days whether or not they will proceed. Overall, however, the buyside has already drawn a line in the sand at 9.50% amid talk of low double digits, essentially rejecting the 9.25% Caucedo had been heard targeting, say people familiar with the situation. Roadshows for the BB minus debut issuer were scheduled to end last week via leads Bank of America Merrill Lynch, Citi and JPMorgan. According to Fitch, proceeds were slated to refinance $97.8m in outstanding debt, and fund capex and yard infrastructure improvements. Funds were also earmarked to pay $50m in dividends. Pricing and use of proceeds may simply have been overly ambitious, says one banker. “This deal is a fundamental bet on global trade and global trade cycles which are very volatile and dependent on growth in the Dominican Republic,” notes one US-based investor. The island nation saw tourism revenues jump 3.5% to $4.36bn last year, the highest in recorded history, while also seeing a surge in FDI flows, according to JPMorgan. But this comes ahead of tight presidential race this year and at time when the country is still talking to the IMF about possibly extending the stand-by agreement for another 6 months as it waits for a final $500m disbursement from the Fund. “[It’s] tough with IMF loan expiring plus elections coming up, not to mention the shipping industry is a distressed industry,” the investor adds. Managed by DP World and located in PuntaCaucedo, 25km from Santo Domingo, the port is one of the largest port terminals in the Caribbean and the biggest container port terminal in the Dominican Republic.
Digicel Sees Tight Trade
Digicel Limited has raised $250m in new 2020 bonds, landing its lower coupon since a 2009 issuance of 8.25% $800m 2017 bonds. The Caribbean telecom priced the 8NC4 notes at par to yield 7% or T+ 503bp in line with 7.00%-7.25% guidance. “Too tight and below fair value,” says one EM investor, who comped against Digicel’s existing 2017s, which were being quoted at 105 or at 6.65% on a yield-to-worst basis. Based on that, he calculated fair value at 7.6% calculated fair value without a new issue concession. Proceeds are marked for general corporate purposes. Citi, JPMorgan, Credit Suisse, Deutsche Bank and Barclays led the B/B1 rated transaction. The issuer sold the 2017 notes through Digicel Limited in December 2009 at an 8.50% yield, to fund a buyback of more expensive 9.25% of 2012 bonds. The bonds were trading at 100.25 on the break, says an investor.
Itau Syndication Head Heard Leaving
Itau’s LatAm syndications head Surat Maheshwari is heard leaving the Brazilian bank after less than a year in the position. Masheshwari joined Itau in March last year to head external debt syndications in New York after working as head of private placements and syndication at Nomura Securities. Prior to that, he also worked at Dresdner Kleinwort, IFC, ING and Citi.
Cemex Ups Bid For Ireland’s Readymix
Mexico’s Cemex has increased its bid for a stake in Irish company Readymix that it doesn’t already own. Cemex has decided to increase its offer to EUR0.25 per share of Readymix from a previous EUR0.22 per share cash bid, the company says. Cemex currently owns 62% of the company, a Cemex spokesman adds, and is currently seeking to acquire the 38% stake remaining. Company officials could not immediately provide additional details. Officials at Readymix could not be reached for further comment. Cemex’s offer values the company at approximately EUR27.4m ($36m), as estimated using the company’s 109.6m shares outstanding. On Monday, Readymix shares trading on the Irish Stock Exchange closed at EUR0.22 per share or an implied market cap of roughly EUR24m.
Credito Real Targets Local Bond
Mexico’s Credito Real plans to raise up to MXP1bn ($79m) in the domestic bond market, estimating a February 15 pricing date. The proposed 3-year floating rate bonds are part of a MXP2.5bn program, and proceeds are expected to be used to refinance debt. BBVA Bancomer is leading the transaction, rated A minus/A on a national scale. Credito Real paid TIIE+325bp the last time it issued 3-year floating rate bonds, in a MXP400m November sale partially guaranteed by Nacional Financiera and the Inter-American development bank.
S&P Downgrades Belize on Debt Payment Concerns
S&P has downgraded Belize’s long-term sovereign ratings to CCC+ from B minus after the country’s prime minister Dean Barrow raised debt service as an election issue. The prime minister’s party may ultimately reverse its campaign rhetoric if it regains power, but such talk raises questions about “the political commitment to timely debt service” following the nationalization of the country’s main electricity and telecom companies, the agency says. S&P also points to a weakening current account at a time when external financing options are limited. “We project Belize’s 2012 gross external financing requirement at 114% of current account receipts plus useable reserves,” it adds. Nationalizations dented investor confidence last year and had left some analysts fearing the added fiscal burdens and negative sentiment produced by such moves would eventually force Belize to restructure its so-called superbond due 2029 after defaulting just six years ago. Moody’s notes that coupons on the $546.8m superbond will step up in August to 8.5% from 6%, and that overall government interest payments will rise to 15% of general revenues. “The stable outlook balances the possibility that the government will seek debt relief to reduce a rising external interest burden against the possibility that debt management will improve after the general elections this year,” the agency says.
Bond Issuance Yet to Abate Despite Record Volumes
After a week that saw over $10bn in new bond supply from LatAm corporates, bankers are anticipating more busy days this week as borrowers look to print before quarterly numbers go stale. With better-than-expected US job numbers bolstering sentiment on Friday, the region’s borrowers should be able to get a few more trades out the door, bankers say. This comes in the wake of what are record volumes for EM and LatAm cross-border trades year-to-date. According to Dealogic, volumes out of LatAm hit $26.52bn from 35 deals, topping the $17.44bn in volume and 27 deals seen during the same period in 2011. LatAm appears to be leading the way in EM, says one senior banker, with the region generating nearly $27bn over the first 5 weeks of the year, including Petrobras’s jumbo $7bn trade last week, versus a total of $58bn for EM overall. More deals are on the immediate horizon, with Brasil Telecom (Oi) and Dominican port terminal Caucedo preparing bonds for this week. Market chatter is also pointing to a possible issue from Comision Federal de Electricidad (CFE). The state-controlled utility met accounts late last year via BBVA, BNP Paribas and Citigroup, but never printed. The borrower last raised 10-year money with a $1bn 4.875% 2021, but it has long sought to extend to 30 years. The secondary price differentials between Pemex and CFE’s 2021s suggests some supply may be on the way, says one banker. “About two weeks ago CFE was 15bp-20bp tighter to Pemex, now it is 10bp wider,” he adds. The investment grade issuer (Baa1/BBB/BBB) should prove popular with large institutional accounts looking for some pick up in defensive sectors. “We should see more high-grade deals than anything,” says one US-based investor. “High-grade players in decent industries like oil and gas, mining and telecoms, can easily get $3bn-$4bn. It is great geographic diversification.” That said, lower-grade credits are having a good run and taking advantage of the fact that investors seem to be welcoming them
Mexichem Readies Local Foray
Mexichem is preparing an up to MXP5bn ($394.3m) domestic bond issue, expected as soon as the end of February, say sources familiar with the deal. The petrochemicals producer plans to sell new 10-year fixed rate bonds, in addition to reopening its 2016 floating rate bonds which pay TIIE+60bp. The 2016s were originally sold in September for MXP2.5bn. The issuer is raising funds to refinance debt. A roadshow schedule has not yet been set for the issue, to be led by BBVA, Banamex and HSBC. Mexichem has an AA national scale rating.
CAF Prints Swiss Deal Ahead of European Meetings
Regional development CAF took advantage of improving swap rates from CHF to USD Friday to tap the Swiss franc market Friday with a CHF125m ($136m) 2-year floater. Given the lengthy period required for settlement to come into effect in Switzerland – in this case February 24 – the borrower wanted to jump now before numbers grew stale. Leads were able to anchor the trade with some reverse enquiry and a CHF100m size only to upsize it later as more investors expressed interest in the paper before pricing at par to yield 3-month CHF Libor+125bp. Demand came primarily from bank treasuries seeking short-dated FRNs for their own portfolios, with some private banking participating as well. Ratings are A1/A+/A+ (stable/positive/stable) by Moody’s S&P and Fitch. BNP Paribas acted as sole lead. This comes as HSBC takes CAF to see investors in Europe this week to update them on the credit.