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.
Category: Regions
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
Cabei Returns to USD Market after Three Year Hiatus
Central American development bank Cabei tapped both the international and local markets Thursday to raise $367m in one fell swoop. The borrower returned to the dollar markets for the first time since 2009, tempted by what remain ultra-low yields and the strong performance of recent deals. Cabei priced a $250m 5-year at 99.104 with a 3.875% coupon to yield 4.075%, at the tight end of 4.125% area guidance (+/-5bp). Capped at $250m, the deal saw largely buy-and-hold accounts participate, driving demand up to 3x. Appetite for the paper largely came from the US, but there was also strong participation from European accounts familiar with the name now that Cabei has made several forays in the Swiss franc market. Ratings are A2/A minus. Citi and HSBC acted as bookrunners. The deal came as Cabei also issued MXN1.5bn ($117m) in the Mexican domestic bond market yesterday. The 3-year bonds pay TIIE+15bp, in line with expectations, and the issue saw MXN2.4bn of demand. Banamex led the sale, rated AAA on a national scale. Buyers were said to be a diversified mix. Proceeds from both deals are expected to be used for general corporate purposes.
Small AIH Offering Marks 2012’s First LatAm IPO
It may have been small, but Andino Investment Holding’s PES116m ($43m) equity offering Thursday can lay claim to being LatAm’s first IPO this year. The Peruvian port operator sold 35m shares at PES3.30 each, in a deal offered to local investors. The issuer had tried to come to market in the third week of January, and was heard eyeing around PES5.00 per share, but it postponed the offer until Thursday. Demand for the sale was heard at 1.2x-1.3x. AIH is raising funds to reduce debt and for expansion projects. BCP managed the sale. AIH has been growing, and borrowed $85m from Goldman Sachs last year to purchase fellow port operators Neptunia and Agencia Maritima. Bigger initial offerings are set to follow in the region. Brasil Travel is preparing to raise up to BRL1.21bn ($703m) on Wednesday, and Colombia’s Construcciones El Condor should launch soon an IPO of at least $70m-equivalent this month.
Investors Delight in CentAm Debut
The Central American Bottling Corporation (Cabcorp) priced a $200m 2022 bond Thursday, upsizing from $150m in its international bond market debut. The Guatemala-based anchor bottler for Pepsi in Central America priced the notes at 98.235 to yield 7.00% with 6.75% coupon, tight to 7.75% area guidance. “The issuance went very well given its status as a high quality high-yield credit,” says one investor. The bonds were trading up 2.00 points in the grey Thursday afternoon, according to an investor. Demand for the producer, distributor and marketer of drinks of various kinds was heard at 10x. While difficult to comp, the deal was thought to offer investors at least 40bp-50bp over where a hypothetical new Guatemala 10-year sovereign bond could issue. “There is not much in Guatemala, so with this issuer at 1.0x levered and as a soft drink bottler it was bound to do well,” says an EM investor. Citi was the sole lead on the Ba2/ BB/ BB+ transaction. Cabcorp is controlled by the Castillo family, with Pepsico holding an 18% stake. Cabcorp expanded into the Caribbean in 2009 when it bought PepsiAmericas and its territories in Puerto Rico, Jamaica and Trinidad. As of September 30, 2011, short-term maturities only amounted to $19m, versus $85m of cash on hand, according to Moody’s.
Mexican Homebuilder Nails Down New Bond
Desarrolladora Homex became the second Mexican homebuilder to tap the dollar market this year in an effort to smooth refinancing humps. With demand hitting $1.5bn from some 144 orders, the borrower was able to tighten from 10.25% area guidance and price an upsized $400m 2020 NC4 at 98.592 with a 9.75% coupon to yield 10.00% or 817.4bp over. The paper was sold principally in the US (72%), but also was allocated to investors in the UK (17%), Europe (6%), Asia (3%) and LatAm (3%). Investor types comprised fund managers (74%), hedge funds (9%), retail and high-net worth accounts (4%), banks (2%) and insurance companies (2%). In the end, the trade came some 40bp wide to the 9.60% secondary level seen on Urbi’s new 10-year NC5s, which have rallied since they were priced in January to yield 10%. Credit Suisse and Deutsche Bank acted as leads. Both Homex and Urbi’s ability to tap the international markets with relatively long tenors has been seen as credit positive at a time when the sector has heavy refinancing requirements, though exposure to dollar liabilities remains a concern. “Heavy reliance on international borrowing in the US bond market exposes the sector to continuing currency risk, with a mismatch between peso-denominated cash flows and dollar denominated debt service,” Fitch says in a recent report. Still such exposure varies from homebuilder to homebuilder depending on their hedging policies, it adds.
Mexico Blocks Televisa Deal with Iusacell
Mexican regulators have decided against approving multimedia company Televisa’s purchase of a 50% stake in wireless provider Iusacell, in a deal valued at $1.6bn. The companies reached an agreement in April 2011 as a way to give Televisa access to the mobile industry and strengthen Iusacell’s business. Commissioners at Mexico’s Comision Federal de Competencia, COFECO, voted 3 to 2 in favor of blocking the transaction, Televisa says. The company says it is contemplating “several legal alternatives” to encourage COFECO to reconsider its decision. Officials at Televisa declined to offer additional comments, while officials at Iusacell could not immediately be reached for more details. Televisa says it 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 fell 3.3% on Thursday to $19.63 following the company’s confirmation of the regulatory move.
Atlantia, Bertin Strike Brazilian Motorway JV
Italy’s Atlantia, a toll road operating company, has created a joint venture with Brazil’s energy and infrastructure company Bertin SA in an effort to pool motorway concession projects. The agreement creates the second largest motorway operator in Sao Paulo with a concession life of 25 years. Under the deal, each partner will control a 50% stake in a venture with assets that should generate Ebitda of roughly BRL630m ($359m) with net debt of BRL1.625bn ($926m) in 2012, Atlantia says. Morgan Stanley advised Atlantia on the deal. Officials from Atlantia and Bertin, however, could not immediately be reached for additional comment. A new company comprising holdings from both Atlantia and Bertin will issue equity at a price of BRL236 per share. Atlantia will contribute the Triangulo do Sol, 442 km motorway concession in Sao Paulo state, while Bertin will do the same with its Colinas and Nacentes das Gerais concessions in Sao Paulo and Minas Gerais. The deal also includes an option for the new company to acquire a 95% stake in SPMR, the holder of the Rodoanel motorway concession and the creation of a second joint venture company structured along similar lines with a 50/50 split to handle a 50% stake in the Tiete concession in Sao Paulo.
Molymet Buys into US Rare Earth Producer
Chile’s Molibdenos y Metales (Molymet) has acquired a 13% stake in US rare earth producer Molycorp for $390.2m. The deal involves an all-cash acquisition of 12.5m shares of Molycorp common stock, for which Molymet gets a seat on Molycorp’s board. Officials at Molycorp could not immediately be reached for additional comment, and a Molymet spokesman declined to offer additional details of the transaction. Fitch Ratings noted that the deal should not affect Molymet’s BBB rating. Following the deal, Fitch estimates the Chilean company will maintain a debt to Ebitda ratio of 1.2x, a slight increase from its 1.0x four-year average, but still within its ratings range. Molymet is a leading player in the global market for molybdenum, a metal used to produce high-strength steel alloys, and rhenium, a rare silvery metal used in jet engine production. The deal gives Molymet the capacity to produce 19,050 metric tons of oxide from rare earths, and may reach 40,000 metric tons in 2013, the company says.
AMX Becomes First LatAm Dim Sum Issuer
America Movil became LatAm’s first borrower to tap the so-called Dim Sum market Wednesday when it issued a CHN1bn ($160m) 3-year bond. This is expected to be the first of several from the Mexican telecom giant and this year could see other LatAm corporates take a stab at the rapidly growing offshore renminbi-denominated market, bankers say. “We want to establish a more regular presence in this market with funding that can used to cover our inputs of Chinese goods,” the company’s CFO Carlos Garcia Moreno tells LatinFinance. “This is not meant to be a one-off transaction.” With America Movil’s Chinese vendor network growing considerably in recent years, the company has been looking to raise financing in a currency that better matches this commercial relationship. A similar logic prevailed when in 2009 it secured a $1bn 10-year loan from the China Development Bank. “About a year ago we prepaid that loan and at the time we saw the Dim Sum market was beginning [to grow],” Garcia Moreno says. “There was a clear intention by the Chinese government to develop the renminbi market with the idea that more people would buy more Chinese products and pay for them in the Chinese currency.” America Movil joins a select group of EM and multinationals such as McDonald’s and Caterpillar that have tapped into this asset class. McDonald’s, for instance, raised a smaller CHN200m 3-year at 3% during the summer of 2010, and more recently China Development Bank came with 3 and 5-year Dim Sum bonds at 3.10% and 3.45%.“America Movil is well-known and followed by investors globally It is a good first time issuer to lead this effort [for LatAm],” says Katia Bouazza, co-head of global capital markets, Americas at HSBC, which acted as sole bookrunner on the transaction. America Movil itself generated a CHN2bn book and priced at par to yield 3.50%, the tight end of 3.50-3.60% guidance. Marking a new twist to Dim Sum deals, AMX’s bond also registered the paper with the SEC, opening the door to a br