By sticking to a shorter tenor and enticing investors with an attractive pickup to rival Bancolombia, Banco de Bogota was able to draw a decent crowd for its debut bond in a market that is not necessarily enamored with the FIG paper. After turning heads with 5.5% area talk on a $500m 5-year, Banco de Bogota was able to revise guidance lower to 5.25% (+/- 1/8) and upsize to $600m before pricing at 98.894 with a 5.00% coupon to yield 5.25%. Books swelled to around $3.25bn as investors comped the credit (Baa2/BBB minus) against Bancolombia’s 2016s (Baa3/BBB minus), which were trading between 4.25%-4.375%, a spread differential that leads were heard justifying by the maturity extension and the bank’s debut status. The bonds were trading up 0.45-0.75 points in the grey, according to an investor. The transaction raises funds to take out half of a $1.2bn 1-year bridge loan used to expand into Central America through the $1.9bn acquisition of Panama-based BAC-Credomatic in July 2010. Banco de Bogota is also raising a $500m 3-year syndicated loan, which is documentation nd expected to close later this week. Citi, HSBC and JPMorgan managed the sale, and were also leads on the bridge and loan as well.
Category: Regions
Abengoa Project Preps Bond Takeout
Abengoa Cogeneracion Tabasco (ACT) is heard to be preparing investor meetings this week via Credit Suisse for an up to $600m senior secured 2032 bond, after Fitch and S&P assigned a BBB minus ratings to the offering. The bulk of financing is expected to take-out bank debt, while the remainder will cover construction costs to build a gas fired co-generation plant that will operate within a complex owned by Mexican state-owned oil company Pemex (BBB), which is the sole off-taker. ACT is a special purpose vehicle owned by subsidiaries of Spain’s Abengoa and GE Capital. In 2009, both companies signed a 20-year PPA with Pemex to construct, operate and build the facility that is expected to cost $743.5m, $143.5m of which comes from the sponsors in the form of equity. In 2010, Abengoa closed a $460m 7-year loan to build the 300MW facility through structuring and syndication agent Santander. The facility pays a step-up spread starting at Libor plus 412bp for the 36-month construction period, and rising to 437bp through month 48, 462bp through month 60, and 562bp through month 78. The project is expected to be completed in September next year. According to a person familiar with transaction, about $367m of the bond’s proceeds will pay outstanding bank loans, about $79m will cover an engineering, procurement and construction (EPC) contract, $44m for interest payment during the project construction, $23m for the service reserve account, and $65m for swap termination costs and a letter of credit agreement. As positives, Fitch cites the low completion risks, as well as sponsorship from companies with a strong track record in this area.
CFE Puts Local Trade to Bed
Mexico’s Comision Federal de Electricidad (CFE) has sold a MXP1.358bn in ($100m) floater in the domestic market. The 4-year notes priced at TIIE+35bp, in line with guidance of TIIE+ 35bp-40bp and 10bp wide of initial price expectations. Demand was heard at 1.3x, with participation coming from pension funds, bank treasuries and mutual funds. The deal wraps up the last issuance under the MXP3bn Fideicomiso de Administracion de Gastos Previos trust. The state-owned utility uses the Bancomext-guaranteed trust to pre-fund subcontractors’ authorized expenses under a special infrastructure program that cannot be reimbursed before project completion. Ixe managed the transaction, rated AAA on a national scale. CFE had previously visited the domestic market in September when it raised MXP7bn from a reopening of its 2014 and 2020 bonds, after seeing more than MXP13bn in demand.
Batista Adds to Sport Entertainment JV
Brazil’s EBX and global sports and media company IMG Worldwide have purchased sports agency Brasil 1 Sports and Entertainment for their recently created entertainment joint venture IMX. The holdco for Brazilian billionaire Eike Batista’s group of companies, signed a 50-50 joint venture with IMG in November with the aim of turning it into the leading sports, entertainment and arena company in the country. The IMX venture’s portfolio of projects includes the Volvo Ocean Race, the LPGA Brazil Cup, the Travessia dos Fortes open water marathon and the Ultimate Fighting Championship. A spokesman for EBX could offer no valuation details of the transaction and said the total amount paid for Brasil 1 will remain confidential. He could not immediately say if the partners used any financial advisors.
City of Lima Sounds US Accounts
The City of Lima has been sounding out the US buyside about an international bond, says one investor who has talked to municipal officials about such a possibility. Citigroup has been coordinating some discussions, according to this investor, but other banks are also heard talking to the borrower. The municipality is thought to be considering a debut $500m in sol-denominated bonds. Fitch rates the City of Lima’s foreign and local currency long-term debt at BBB minus.
Mexico’s Alsea Grabs Italian Chain
Mexican food and beverage franchise operator Alsea has purchased Italcafe, the parent company of Mexico’s Italianni’s restaurant franchise, in a transaction valued at MXP2.05bn ($149.5m). The deal includes the purchase 8 Italianni units as well as an 89.8% stake in Grupo Amigos de San Miguel, which controls 34 of Italianni’s restaurants across the country. The purchase also includes the fee use of the Italianni’s brand name for up to 30 years, free of franchise royalties. An Alsea spokesman declined to offer any more details on the transaction or reveal advisors until Alsea holds a press conference, scheduled for Monday. The Alsea document does point out, however, that the companies agreed to an enterprise value-to-Ebitda multiple valuation of 8.5x, assuming an Ebitda of the last 6 months up until June 2011 of MXP241.5m ($17.6m). Notably, the deal includes a clause that allows Italcafe to cancel the sale if a due diligence review now underway determines an Ebitda of less than MXP218m ($15.9m). At that level, the 8.5x multiple agreed by the parties would yield a $135.15m price tag for the Italcafe franchise. Alsea said it plans to finance the deal with the help of 4 loans obtained from HSBC, Banamex, Santander and BBVA Bancomer, at tenors of 5 years each. Alsea is known as the operator for brands such as Starbucks, Dominos Pizza and Burger King in Mexico. Company officials have expressed an interest in expanding locally and in other parts of South America.
Cemex Comfortable with Covenants
With a sooner-than-expected windfall from the Venezuelan government and a steady reduction of bank debt, Cemex feels comfortable meeting loan covenants going into the first half of next year, though this may be a different story as leverage ratios become more stringent by the end of 2012. “We have said we are highly confident that we will meet our year end [2011] covenants. If you take a look at our operating cash flow there is little question we will not do it,” says Maher Al-Haffar, vice president of public affairs and investor relations at Cemex. This comes as the borrower continues to contemplate ways to access the capital markets to cover a $6.7bn debt payment in 2014, wean itself off bank debt, and generally “de-risk” its balance sheet. “Bond holders will become more important,” says Al-Haffar. Fortunately for the cement company, it has some breathing space ahead of its 2014 payments at time when markets are still largely closed to high-yield names like Cemex. But this doesn’t mean that it will not take a proactive approach to capital market forays. “We have a track record at Cemex of being extremely anticipatory, and we know these things are not to be taken lightly,” he says. The company is poised to receive a sooner-than-expected windfall from the Venezuelan government, which has agreed to pay $600m equivalent as compensation for the assets taken in a nationalization campaign in 2008. Venezuela will make an initial payment of $240m in cash and $360m in securities issued by state-owned oil company PDVSA. Payment is expected anytime up to until December 12, after which time the company will clarify details about the PDVSA securities and what it intends to do with the proceeds. Al-Haffar indicated that proceeds could in theory be used to pay down debt and hence lower the amount of growth required to comply with covenants that call for leverage ratios of 6.5x by June 2012. Going forward, however, it may be a struggle to reach the 5.75x threshold set for the end
Infonavit Prices MXP RMBS
Mexico’s Infonavit has issued MXP1.1bn ($82m) of RMBSs backed by Infonavit mortgages in the domestic market. The state mortgage lender locked in its lowest coupon this year, with a UDI-denominated 2039 that was priced at 4.45%, inside talk of 4.50%, or 264bp over the government’s UDIbonos. The transaction was heard 1.7x oversubscribed after over 40 accounts participated, including private banking clients, insurance companies, investment funds, pension funds and bank treasuries. Proceeds will be used to create new mortgages. Banamex managed the sale, rated AAA on a local scale. Infonavit plans to issue a third RMBS under its MXP6bn program in February 2012 through Banamex and HSBC.
Banco de Bogota Bond Gets BBB Minus Rating
Fitch and S&P have each assigned a BBB minus rating with stable outlook to Banco de Bogota’s proposed USD senior unsecured notes. Colombia’s second largest lender is looking to raise a total of $1bn to in the bond and loan markets to pay back a 1-year $1.2bn bridge loan used for acquisition financing. The borrower was due to wrap up meetings with bond investors in New York and Los Angeles Thursday with Citi, HSBC and JPMorgan. Banco de Bogota is heard considering a $500m bond with a possible 10-year tenor, according to an investor who met with the name, but nothing had been announced as of late Thursday. Banco de Bogota is in the process of syndicating a $500m 3-year loan at Libor+225bp.
Petrotemex Closes Loan Amendment
Mexican petrochemical company Petrotemex has closed an amendment to its $600m loan after watching several European and Chilean banks decline to participate, and BBVA joining as a newcomer. Originally used to finance the company’s acquisition of Eastman Chemical’s PET business in the US, the facility keeps the original pricing structure, but changes from a 3-year bullet into a 5-year amortizer. The 5-year will require a $125m payment in 2013, $75m in 2014, $200m in 2015 and $200 in 2016, all in quarterly payments, with a smaller amortization in 2014 when the company has a bond maturing.
Spain’s BBVA joined the facility, while Credit Agricole, RBS, Banco de Chile and BCI dropped out. Existing bankers were paid upfront fees of 65bp, while new money entrants got 85bp. The amendment still paysLibor+300bp out of the box and was 10% oversubscribed. On the original transaction, Inbursa, Santander, ING, Credit Agricole and Bancomext came in as MLAs, while Scotia, Banco de Chile, Banorte and Bank of America participated as arrangers. Bank of Tokyo Mitsubishi, Bladex, Mizuho and Wells Fargo had been committed as managers. Credit Suisse and HSBC led the amendment.