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.
Category: Regions
Peruvian Cement Co. Makes ADR Debut
Peru’s Cementos Pacasmayo has priced a $264.5m equity follow-on, representing its debut ADR offering. The cement maker sold 20m ADRs, representing 100m shares, at $11.50 each, landing at the bottom of a $11.50-$13.00 range. It will raise $264.5m from the sale, assuming the exercise of a 3m ADR greenshoe. Its Peru shares closed Tuesday at PES6.85. The offer is seen as essentially being an IPO for the cement company, as its Lima shares are relatively illiquid. “It is a good story, though there may have been some concern about the size,” says a US-based equity investor ahead of the pricing. Buyers say they like the Peru growth story and that a great deal of Pacasmayo’s business is tied to retail sales for self-construction, which can offer higher returns. Pacasmayo is raising funds for the expansion of its La Rioja plant and also for the development of a phosphate and brine project. JPMorgan and Santander managed the transaction. Founded in 1949, Pacasmayo is one of 2 companies making up the Hocschild Group, along with Hocschild mining. Chairman Eduardo Hocschild’s Inversiones Pacasmayo owned 63.9% of Cementos Pacasmayo prior to the sale, and was set to have 52.7% afterwards, according to regulatory documents. The next large equity deal in the region is the BRL1.2bn IPO of Brasil Travel, scheduled for today.
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.
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.
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.
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.