El Salvador is set to receive a $50m Inter-American Development Bank loan for natural disaster infrastructure and preparation, as well as living condition improvements. The 25-year loan has a grace period of 5 years and an interest rate based on Libor. In September last year, the IDB approved a $200m loan to help strengthen El Salvador’s financial sector as part of an about $450m package.
Category: Regions
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VW Bank Nears MXP Debut
Mexico’s Volkswagen Bank is close to issuing a MXP 1bn ($71m) domestic bond debut. The 3-year floating rate notes have a tentative issuance date of December 1, if market conditions permit. The bonds, rated AAA on a national scale, will be guaranteed by parent Volkswagen Financial Services. HSBC and Santander are managing the transaction.
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Petrobras to Engage European Accounts
Petrobras will start fixed-income investor meetings in Europe this week, joining a string of other EM issuers testing sentiment for potential international deals in December. This comes at a time when concerns over the Continent’s debt crisis continue to intensify, making some borrowers believe that they perhaps should quickly tap funding before the situation worsens rather than wait for the traditional January rush. Still, the Brazilian oil company faces tough conditions in what is the epicenter of global volatility these days, though it may be able to garner interest from European accounts seeking high quality EM names and diversification away from credits at home. Should investors be receptive, Petrobras may well move ahead with what will be debut in euros and sterling, following in the wake of a similar and successful dual-tranche offering sold by Mexican telecom America Movil earlier this year. However, it remains a matter for debate whether Petrobras is willing to pay the price for diversifying its funding base at time when European issuers have been seeing new issue premiums in the 40-50bp range. That is well above the 10-15bp maximum Petrobras CFO Almir Barbassa told LatinFinance he was willing to pay. Still AMX faced similar stumbling blocks and was able to achieve satisfactory pricing by focusing instead on relative value, looking at where AMX historically traded against Europeans peers and trying to price inside those levels. Petrobras management is splitting into 3 teams and has mandated BB Securities, Bradesco, Credit Agricole, Deutsche Bank, HSBC and Santander to help engage with the European buyside. It will be in Paris and the Netherlands on Monday, in London, Edinburgh and Switzerland on Tuesday and in Germany and London again on Wednesday.
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Rabobank Set to Sell Chilean Bond
Dutch bank Rabobank is looking to sell UF2.5m ($105m) in 5-year bullet bonds in the Chilean market on November 30. The deal is expected to have a UF-denominated and a peso-denominated tranche. A third, US dollar-based tranche was initially included but isn’t seeing the demand, says a person familiar with the sale. The UF tranche is expected to have a 3.05% coupon, and the peso tranche a 6.05% coupon. Proceeds will be used to fund operations. The bond is rated AAA by Feller and Fitch. Celfin Capital and Deutsche Bank are managing.
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Sura Gets Support on Vital Equity Funding
Grupo de Inversiones Suramericana’s (GrupoSura) COP3.5trn ($1.8bn) equity follow-on last week helped it complete the funding requirements for its acquisition of ING’s LatAm assets in what the company described as Colombia’s largest equity raise by a non-government entity. But tough market conditions have meant that the issuer required the support of a number of co-investors to raise the desired equity financing and stave off any threats to its investment grade rating. This includes Switzerland’s UBS which bought 30m of the shares for a total of COP975bn ($502m), or about a quarter of the entire offering. “An agreement with UBS was already in place, as they were acting as financial advisor in the negotiation process,” a Suramericana spokeswoman says. She adds that the follow-on was done during challenging conditions, but the issuer is satisfied with the result. Indeed equity financing was seen as the best way to ease pressure being exerted by the ratings agencies like S&P, which placed the company’s BBB minus rating on creditwatch earlier this year after noting that incremental indebtedness from the acquisition could impact GrupoSura’s credit profile. Last week GrupoSura also announced that Bancolombia, which is part of the conglomerate’s investment portfolio, was undergoing the required analysis and internal approvals to become a co-investor as well. Bancolombia, along with Santander, led the transaction, while UBS was one of the original acquisition bridge lenders along with BBVA, Deutsche Bank, HSBC and JPMorgan. This follows similar moves by the IFC and Sociedades Bolivar which respectively took 5% and 10% stakes in the pension and insurance business acquired from ING for $3.76bn.Local brokerage Bolsa y Renta calculates that after minority stake investments, the FO and cash on hand, GrupoSura needs to raise just COP1trn ($500m) in debt, though Bancolombia’s contribution may well cover a large portion of that. “We believe that it shouldn’t lose its investment grad
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Mexichem Eyes Dutch Pipe Maker
Mexichem has made an unsolicited offer to acquire Wavin, a Dutch plastic-pipe manufacturer, a move that the Mexican chemical company says would create the largest PVC tube maker in the world with sales of over EUR4bn. Mexichem is making a cash offer of EUR8.50 per ordinary share. Wavin confirmed it has received an “unsolicited indicative non-binding” offer for all its outstanding shares. The company has said its board will consider the proposal and has retained Bank of America Merrill Lynch (BAML) to advise in the deal. Mexichem has brought in Barclays Capital and Citigroup as financial advisors and Allen & Overy as legal advisors. Last year Wavin generated EUR1.2bn in revenues and, most recently, posted Ebitda of EUR35.8m in Q3 of 2011. In September Mexichem closed a $1bn 3-year revolver intended to provide it with the necessary resources to take advantage of acquisition opportunities. Tied to a ratings grid, the loan offered L+90bp out of the box for utilization of less than 33%, 95bp for utilization of between 33%-67% and 100bp for over 67%. Spreads tighten or widen by 20bp for each ratings notch above or below BBB minus. Leads were Bank of America, BBVA, Citigroup, HSBC, JPMorgan and Santander.
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Santander Targets Early December for Chile FO
Santander Chile is targeting the week of December 5 for a secondary share equity follow-on that is expected to raise close to $1bn. The Spanish parent is looking to sell 7.8% of the Chilean unit held by the Teatinos Siglo XXI Inversiones vehicle, to strengthen its capital position, as part of a larger selldown that also involves reducing its stake in its Brazilian operation. But completing a deal before the year-end could prove tricky given the size of the transaction and questions over whether Santander Spain will be forced into further sales in the future. “In this scenario, with a weak progress in the operational indicators and the possibility of selling a larger stake if the Spanish situation should deteriorate further in the future, it is unlikely that we will see a significant participation from [domestic] institutional buyers,” local Chilean shop BCI says in a report. With Santander looking to sell 14.74bn shares, represented by 14.19m ADS, the transaction could reach $930m in size based on Tuesday’s closing ADS price of $65.50. Official timing has yet to be released, but sources familiar with the deal say the issuer is considering the week of December 5, if market conditions allow. The offer is to include an international and domestic portion. Santander, Bank of America Merrill Lynch and Credit Suisse are managing the international portion, while Santander and LarrainVial will handle Chilean orders. The announcement follows the renewal of a shelf to sell secondary shares of Santander Brasil. Santander could sell up to 8.2% of the Brazilian unit in a transaction that would fetch north of $2bn, though it has yet to specify any offering plans. ECM bankers away from Santander who have worked on previous transactions for the bank say the Brazil selldown could come in several small pieces – as the bank has been doing – or through a sizable marketed follow-on such as Santander Chile’s. However, such a deal would be unlikely due to poor overall market conditions an
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Fitch Lowers Hovensa to BB Minus
Fitch has downgraded Hovensa’s senior secured debt rating to BB minus from BB+, putting its outlook back to stable from negative. Hovensa is a joint venture between Hess and Venezuelan state-owned oil company PDVSA, and operates in the US Virgin Islands. The ratings downgrade affects some $750m of debt, including bonds maturing in 2022 and a senior secured bank revolver. The agency cites high capex requirements and higher-than-expected financial support for the project as reasons for the downgrade “Given weak refining economics and higher capital costs, Fitch believes the project will continue to require liquidity from the its revolving credit facility and working capital support from Hess and PDVSA,” it says.
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Pequiven Launches Bond Tender
State-owned Petroquimica de Venezuela (Pequiven) has launched a cash tender offer for any and all of its $238m outstanding 8.29% of 2020 bonds issued by the FertiNitro Finance unit. The petrochemical producer is offering holders $1,049.70 per $1,000 principal plus accrued and unpaid interest if they accept by December 6, and $1,000 if creditors tender after the early bird but before expiration on December 20. Due to scheduled amortization payments, as of the date of this offer there is $952.00 in principal for each $1,000 original principal. Pequiven also notes that holders of approximately 79% of the bonds have entered into a lock-up agreement with Pequiven to tender all of their bonds on or prior to the early tender date.
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Belize Outlook Revised to Negative
S&P has revised the outlook on Belize’s B minus rating to negative from stable, citing “diminishing political incentives to service Belize’s external debt.” Rising crime and public-sector wage pressures, along with budget constraints and a weak outlook for investments were among other reasons given for the move. In August, S&P downgraded Belize to B minus with a stable outlook from B because of its higher fiscal deficit and rising contingent liabilities.