By pricing GBP700m ($1.1bn) 2026 bond Monday, Petrobras wrapped up its foray into the European market as it looks to expand its funding base and ease pressures on its core funding base. Bankers agree that the Brazilian oil company paid a premium to its dollar curve, but access to new pools of funding is seen as vital for a credit that needs to cover massive capex needs over the coming years, and the extra cost was probably worth the trouble, say some bankers. “You could say looking at comps in the euro markets that it was normal pricing, but versus the dollar curve they paid a decent new issue concession to access a different set of investors,” says one rival syndicate official. Still, in the end, it was able to raise $1bn equivalent with a lengthy 15-year tenor. Exactly how much the oil company would have paid to make a similar trade in the USD sector was a question for debate, but most bankers agreed that the 295bp G-spread seen on the company’s USD 2021s was the main starting point. In all, Petrobras placed the paper with about 100 investors, few of which were traditional buyers of the credit, namely large pension and insurance companies, with banks largely selling the deal off their high-grade desks. Demand topped the GBP1bn mark before the bond was priced at 97.876 with a 6.25% coupon to yield 6.379% or Gilts plus 370bps. Some cross-over US accounts were also seen nibbling at the edges seeing the trade as a yield play. “They can now come back in 2012 and do a decent size in dollars, so it makes a lot of sense [to tap euros and sterling],” says another senior banker away from the deal. “It may be more expensive, but what would have happened to their dollar spreads if they did everything in dollars?” This comes less than a week after the oil company tapped the euro market for $2.5bn equivalent with EUR1.25bn 6-year priced at 99.021 with a 4.875% coupon to yield mid-swaps plus 285bp, and a smaller EUR600m 10-year that came at 99.266 with a 5.875% coupon at MS+330b
Category: Regions
Mexico Makes MILA Interest Official
Mexico’s stock exchange has signed a letter of intent to begin studies to join the Mercado Integrado Latinamericano (MILA). The move makes its interest official after several previous indications from both sides. It does not give any additional details or an indication of when it might be able to join the alliance of the Peruvian, Chilean and Colombian bourses launched this year.
NII Draws Large High-Yield Crowd
NII retapped its existing 7.625% 2021 bonds for $700m, upsizing from an original $500m size. The US-based operator of LatAm wireless assets, reopened the bonds at 98.50 to yield 7.852% or UST+600bp, in line with 98.50-area guidance. Order books came in excess of $1.4bn from a predominantly high yield focused audience. Proceeds are for general corporate purposes. Credit Suisse, Deutsche Bank, Goldman Sachs and JPMorgan led the B2/B+ transaction, done through the NII Capital unit. In the original transaction priced in March, NII issued $750m of the bonds to yield 7.625%, through Goldman Sachs, Credit Suisse, Deutsche Bank, JPMorgan and Morgan Stanley. NII is a provider of fully-integrated mobile communication services in Latin America.
Investors Take a Shine to PacRu
Colombia’s Pacific Rubiales joined other issuers rushing to market Monday when it priced a $300m 10-year NC5 that was upsized by $50m to make room for more accounts after getting $250m in reverse inquiry. The Ba3/BB E&P operator priced the bond at par with a 7.250% coupon, tight to guidance of 7.375% (+/- 0.125), following initial 7.5% whispers. The bonds were trading up a point in the grey, according to one investor. The trade was largely comped against the borrower’s existing 8.75% 2016s which had been trading at 6.1%-6.0% YTM or at 5.57% on a yield to average life basis. “The deal was not cheap, but it is a good credit, safe haven and operates in the jurisdiction where there is local demand for the bonds,” notes one investor. Demand was driven by high quality asset management accounts mostly from the US. The funds will be used for general corporate purposes. Bank of America Merrill Lynch (BAML) was sole bookrunner on the transaction. Last month, PacRu converted CAD236m ($232m) of its 8% 2014 convertible debentures via an early conversion offer that drew participation from holders of 98.9% of the bonds. One of LatAm’s largest private oil and gas companies, Pacific Rubiales has principal operations in Colombia, Peru and Guatemala. The 8.75% 2016 was its last previous new issue, done in November 2009 when it priced $450m at an 8.95% yield via BAML and Citi.
Banco de Bogota Preps Possible Take-Out
Banco de Bogota, Colombia’s second largest lender, will kick off global investor meetings in the US, Europe and Latin America this week. The debut borrower will see accounts in London and Santiago Tuesday, Boston and Lima Wednesday before wrapping up in New York and LA Thursday. Citi, HSBC and JPMorgan are leading the potential 144A/RegS transaction, rated Baa2. Banco de Bogota secured a $1.2bn 1-year bridge through those financial institutions to help it acquire BAC-Credomatic, a sizeable Central American bank that represents half of Banco de Bogota’s assets. Banco de Bogota’s CFO Maria Luisa Rojas Giraldo told LatinFinance in September the bank was looking at a $1bn 10-year bond to replace the bridge loan. Last month the bank was sounding the market with a $500m 3-year loan carrying a margin of Libor plus 225bp. The same banks were leading the loan transaction.
PDVSA Turns to Chinese Credit to Guarantee Brazil JV
Venezuela’s PDVSA has announced that a $1.5bn credit line will serve as a guarantee for its 30% participation in a joint refinery with Petrobras. This came just a day after the Brazilian oil company agreed to give PDVSA more time to finalize the transaction. Cash and a credit line by the China Development Bank will insure the project’s advance, says PDVSA. A spokesman for the company declined to offer more details. On Thursday, Petrobras announced it had given PDVSA 60 more days to settle its affairs on needed loan guarantees with Brazil’s BNDES to finalize its participation in the $13.36bn project for the Abreu e Lima refinery. The PDVSA statement quotes the company’s president, Rafael Ramirez, saying that it has made the needed money available and “all that is left is for BNDES to do the logistical work” necessary to move forward. Under the terms of the Pernambuco-based refinery, first signed in March 2008, PDVSA would take a 40% stake in the plant and become a main heavy crude supplier for the refinery. The total investment in the plant was originally expected to reach $4bn but now it is estimated at $13.36bn.
AMX RMB Bond Sees A2 Rating
Moody’s has assigned an A2 rating to America Movil’s (AMX) proposed RMB1.9bn ($300m) of senior notes. Proceeds are expected to be used for yuan capital expenditure funding. The outlook is stable. The proposed notes will not be guaranteed by Radio Movil Dipsa, AMX’s largest subsidiary which has provided guarantees to AMX’s previously-issued unsecured notes. Since October 2011, AMX has been issuing senior notes without this guarantee, the agency says. AMX has mandated HSBC to arrange 2-day fixed-income investor meetings in Asia starting today.
Banco de Chile Talks Price
Banco de Chile is looking to pay TIIE+50bp on an up to MXP1.5bn ($111m) 3-year bond, marking a debut for the issuer in the Mexican domestic market. Banco de Chile will be the third Chilean issuer to raise money there following similar moves by Banco de Credito e Inversiones (BCI) and miner Molymet. In July, BCI priced a MXP2bn 5-year floater at TIIE + 40bp, while Molymet in April issued MXP1.5bn 1.5-year bonds at TIIE+55bp. Pricing is scheduled for December 6. Banamex and JPMorgan are leading the transaction, rated AAA on a local sale.
Infonavit Preps MXP RMBS
Mexican mortgage and social services entity Infonavit plans to sell an up to MXP1.1bn ($82m) UDI-denominated RMBS in the domestic market this week. The 28-year security will be backed by Infonavit mortgages targeted at middle and high income borrowers. Pricing is scheduled for December 7. While official guidance has yet to be released, the issuer is heard considering an interest rate in the 4.5%-5% range. “This is a preliminary forecast as pricing is dependent on how the market is at the moment,” notes a person familiar with the transaction. Proceeds will be used to create new mortgages. Banamex is managing the sale, rated AAA on a local scale.
Mexico Holds Rates
Mexico’s central bank has left the benchmark interest rate unchanged at 4.5%. The bank based its decision on positive signs regarding domestic productivity and inflation, along with a continuing deterioration in the global economy, it says. “With respect to growth, Banxico discounts the fact that domestic aggregate demand has been improving recently,” say analysts at Nomura Securities. “In fact, it describes the balance of risks for growth as worse than before. Clearly, Banxico seems to be focusing on the downward revisions to Europe’s growth outlook, which is headed for a recession, and on the lower forecasts for the US economy by the Fed.”