Mexico’s Infonavit sold MXP4.973bn ($391m) of RMBS Wednesday, marking its largest ever issue of this kind in the domestic markets. The state mortgage lender issued a UDI-denominated 28-year bond with 6.2 year average life that priced at 4.50% or 280bp over the government’s UDIbonos, falling in line with 4.45% area price talk. The transaction was heard 1.41x oversubscribed after over 70 accounts participated, including private banking, insurance companies, investment funds, pension funds and bank treasuries. Proceeds will be used to create new mortgages. Banamex and HSBC led the transaction, rated AAA on a national scale. Infonavit plans to issue its next bond issue, a MXP3bn in 28-year UDI-denominated bonds with Banamex and BBVA Bancomer in March or April. Infonavit’s last bond was issued in December, a MXP1.1bn 2039 that priced at UDIbonos plus 264bp, locking in the lender’s lowest coupon for the year at 4.45%. Banamex led that transaction, rated AAA on a national scale. The state mortgage lender’s deal comes under a new MXP10bn program.
Category: Regions
PDVSA Misses New Petrobras JV Deadline
Venezuela’s PDVSA missed a January 30 deadline to finalize its participation in the Abreu e Lima refinery joint venture with Brazil’s Petrobras after failing to secure a $10bn loan from development bank BNDES to pay for the transaction. Failing to offer BNDES the required loan guarantees, the Venezuelan company was unable to secure the financing for its 40% stake in Abreu e Lima located in Brazil’s northeastern state of Pernambuco, a $13.36bn joint venture that was formalized in December 2005, Petrobras says. At the time of the original signature, PDVSA and Petrobras expected the project to be completed in 2011. Late last year, PDVSA said it would secure loan guarantees from its Chinese partners to finalize its participation, but it is unclear whether that ever happened. Officials at PDVSA and BNDES could not immediately be reached for comment. Petrobras has said it plans to move ahead with the project with or without the participation from PDVSA. The project has on occasion been a stone in the shoe of diplomatic relations between both countries. Venezuelan President Hugo Chavez has often publicly complained about the slow pace of the transaction, blaming Petrobras executives and at one point denouncing the BNDES loan guarantees as unnecessary.
Mexichem Tests Waters with Price Thoughts
Mexichem’s is testing the waters with initial price thoughts on a 2-tranche domestic bond as it prepares to raise up to MXP5bn ($394m) as soon as February. Investors are hearing TIIE+60bp to +70bp on a retap of Mexichem’s 2016s floating rate bonds, and around Mbonos+140bp on a fixed-rate 10-year. The 2016s were originally sold in September with a MXP2.5bn size and priced at TIIE+60bp.The Mexican chemical company is raising funds to refinance debt. The issue is being led by BBVA, Banamex and HSBC. Mexichem has an AA national scale rating.
Occidente Preps COP Financing
Colombia’s Banco de Occidente is preparing to sell up to COP200bn ($112.5m) in subordinated bonds today in the local markets. The unit of Grupo Aval is coming out with two series linked to CPI, a 7-year and 10-year with rates capped at CPI+4.60% and CPI+4.90%, respectively. Proceeds are for general corporate purposes. The issue is rated AA+ by BRC Investor Services. Leads are Casa Bolsa, Correval, Ultrabursatiles, Corredores Asociados, Helm, Serfinco, Profesionales de Bolsa and Banco de Occidente. In September, Banco de Occidente sold COP201.2bn of domestic bonds. The offering comprised COP5.4bn in 2014 bonds paying a fixed rate of 6.65%, COP3.5bn in 2014 bonds paying IBR+1.80%, COP12.8bn in 2016 bonds paying a fixed rate of 7.25%, COP52.7bn in 2016s paying IPC+4.00%, COP31.5bn in 2018s paying IPC+4.20%, and COP95.8bn in 2021 bonds paying ICP+4.50%.
Ferreyros Starts Capital Raise
Peruvian heavy machinery distributor Ferreyros has raised PES167m ($62m) in the first stage of an equity capital raise open to existing shareholders, it says. It has placed 73.36m shares at PES2.28 each, representing 98% of the 75m it plans to raise. It will continue the sale Friday through Tuesday.
Peru’s Central Bank Seen Leaving Rates
Peru’s monetary authorities are expected to leave the benchmark rate at 4.25% today, marking what would be the ninth consecutive month it has maintained a hands-off approach. Goldman Sachs notes that the economy has little need for any monetary stimulus, though the 4.23% year-on-year inflation remains outside the central bank’s 1%-3% band.
CFE Raises 30-Year Money at Sub 6%
Fulfilling a long-held ambition, Comision Federal de Electridad (CFE) managed to raise 30-year money Tuesday, while also locking in what was arguably a record low coupon for a Mexican bond with this tenor, at least in the quasi-sovereign and government space. UMS’s 5.75% 100-year is perhaps its closest rival on this front. Whether CFE achieved its goal of pricing inside quasi sovereign peer Pemex is certainly open to debate, but the borrower was thought satisfied with a 5.75% coupon on its new long bond. Pemex 2041s were trading as tight as 253bp over on the interpolated curve and as wide as 260bp, depending on bankers’ views and biases. A new 30-year from Pemex was seen printing anywhere between 270bp to 278bp, after including an extension and new issue premium, with bankers away from the deal conceding that CFE arguably issued flat to the state-owned oil company. As with several other issues this year, weaker underlying secondaries in anticipation of new supply left bankers arguing over new issue premiums, depending on whether they spotted levels pre or post sell-off. Either way, premiums on CFE appeared in line with the 15bp that high-grade issuers have been paying of late. “CFE was wider in expectation of a deal coming to market,” says one rival banker. “It is hard to peg. I would say anywhere between 10bp-25bp, but let’s say 17bp which seems fair.” Some argue that in a market where rates are so low, talk of new issue concessions is nothing more than a chest beating exercises in light of where CFE ultimately priced. In the end, the price sensitive issue sacrificed some size for better pricing, coming with a $750m deal at 98.330 with a 5.75% coupon to yield 5.869%, or T+275bp, tight to whispers of high 200s. For some rival bankers, the relatively modest $2.1bn book size suggests that the deal was fairly priced, and indeed the bonds were up anywhere between plus 0.25 and 0.60 in the grey market heading into pricing. It is thought that the low dollar price was also
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.
Mexican Judge Gives Final Nod to Vitro
Mexico’s Fourth District Court for Civil and Labor matters issued a final approval for Vitro’s debt restructuring plan. The troubled Mexican glassmaker is pushing forward with a $3.6bn debt restructuring that has angered bondholders. The court’s ruling in essence gives the company a stamp of approval for the proposal using the Mexican insolvency law, Vitro says. Despite bondholder opposition, the company has so far managed to approve the plan by using roughly $1.9bn in intercompany debt to give itself enough voting power to approve what has been largely an unpopular restructuring plan. 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. Observers fear the restructuring could limit the financing options for other Mexican corporate issuers in the future.
Mexico Opens Window to Televisa- Iusacell Deal
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.