S&P has assigned an A minus long-term rating to Curacao, with a stable outlook, citing its prosperous economy and stronger balance sheet thanks to recent debt relief from the Dutch government. The agency also believes that the recent decision to raise retirement age to 65 from 60 should also strengthen the public sector pension system over the next decade. Several factors are constraining Curacao’s ratings including low per capita GDP and limited monetary flexibility, it adds.
Category: Regions
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GrupoSura Adds Grupo Bolivar to ING Deal
The Colombian Grupo de Inversiones Sudamericanas (GrupoSura) has taken on Sociedades Bolivar as a second minority shareholder in the pension and insurance business it recently acquired from ING for $3.76bn. Sociedades Bolivar, part of the Grupo Bolivar holding company which includes interests in the finance, insurance and construction businesses, has agreed to pay $400m for a 10% stake in the business. Last week, GrupoSura added the World Bank’s International Finance Corporation (IFC) as a partner with a 5% stake in exchange for $200m. GrupoSura officials have said they expect to take on as many as three minority partners that will control no more than 25% of the business. In July the company agreed to acquire ING’s assets in Chile, Colombia, Mexico, Uruguay and Peru for EUR2.68bn, consisting of EUR65m in assumed debt and EUR2.615bn in cash. At the time, the deal valued the ING assets at a 1.8x book value, or 18x estimated 2011 earnings on a GAAP basis. As such, the deal came at the high end of analyst estimates for the value of the assets.
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S&P Revises Barbados’s Outlook to Negative
S&P has revised Barbados’s outlook to negative from stable, while also affirming its BBB minus foreign currency rating. Large fiscal deficits and rising debt burdens threaten the government’s credit profile. “The negative outlook reflects our view that downside risks to Barbados’s creditworthiness are increasing as the external financial and economic environment weakens,” says S&P analyst Olga Kalinina in a statement. “We believe that domestic fiscal measures may not be sufficient to stabilize the growing debt burden.” Without fiscal adjustments, net general government debt will probably stay at around 52% of GDP between 2011-2013, while interest expenses will consume 13% of government revenues of up until 2014, the agency adds.
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Colombian Gas Company to Mandate on Loan
Gases de Occidente is looking to raise COP70bn ($36.5m) through a 7-year bullet loan, with an anticipated interest rate of DTF+4% or DTF+5.5%. The Colombian natural gas company has yet to select a bank, though Bancolombia is a likely contender in light of the rate it is offering, says a person familiar with the deal. The company is expected to mandate a bank this week.
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GrupoSura Takes WB as Stakeholder in ING Deal
Colombia’s Grupo de Inversiones Suramericana (GrupoSura) has agreed to take on the World Bank as a minority stakeholder in its recent $3.76bn (EUR2.68bn) purchase of ING’s Latin American pension and insurance assets. The International Finance Corporation (IFC), the World Bank’s investment arm, has paid $200m for a 5% stake in the business, the company confirmed. A GrupoSura official said the Colombian financial holding is also contemplating as many as two additional minority partners in the deal which could be announced in days. GrupoSura’s plan is to take on as many as three minority partners before closing the ING deal on Dec.20. The minority partners will control no more than 25% of the business. In July, the Colombian firm struck a deal to buy ING’s pension and insurance assets in Chile, Colombia, Mexico, Uruguay and Peru for EUR2.68bn, consisting of EUR65m in assumed debt and EUR2.615bn in cash. At the time, the deal valued the ING assets at a 1.8x book value, or 18x estimated 2011 earnings on a GAAP basis, a significant premium to the 0.7x price-to-book ratio. As such, the deal came at the high end of analyst estimates for the value of the assets.
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Investors Drawn to Lindley Debut
Rarity value, a strong local bid and divergent pricing views all helped Peru’s Corporacion Lindley generate a $2bn plus book Friday for its $320m 10-year bond, a transaction that marked an international bond debut for the company. The popularity of the sector and Lindley’s status as the official Coca-Cola bottler in Peru didn’t hurt either. “It was in the strike zone. It is Coke and from a corporate perspective, it has what investors are looking for, scarcity and new name value,” notes one rival banker. A BB+/BBB minus split rating and a dearth of true comps made the transaction a true exercise in price discovery. Indeed, several accounts struggled to place the credit in an appropriate category. Talk at 7% area may have seemed cheap from an investment-grade perspective, but expensive if the credit was still considered double B. One London-based EM portfolio manager thought the deal was mispriced, but participated nonetheless after initially comparing it to lower rated Peruvian credit Intercorp Retail’s (BB-/B1) 8.875% 2018s, which were priced earlier this month and were trading at 8.55%-8.45% last week. Arguably the borrower benefited from the broad swath of investors eyeing the trade and the subsequent price tensions this created. Lindleys’ strong name recognition helped drive robust demand from locals and meant that leads had more than their fair share of accounts tugging at their sleeves. Indeed, according to some, this left little room for cross-border participation, and may explain way the bond was trading up at +1.50-+1.75 in the grey before it priced at par to yield 6.75%. The new issue will bring net-debt-to-Ebitda to around 4x, but plans are afoot to reduce that to 2.5x by 2015, assuming 9% annual growth. Citigroup and JPMorgan managed the bond transaction. The Lima-based company produces, bottles, and distributes Inca Kola and other carbonated and non-carbonated drinks.
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CFE Readies International Meetings
Mexico’s Comision Federal de Electricidad (CFE) will meet fixed-income investors in the US at the end of this month, just 6 months after it last came to the international markets. The Baa1/BBB/BBB rated borrower will see accounts beginning November 30 in Los Angeles and Boston before wrapping up in Chicago and New York on Thursday, December 1. CFE last came to the dollar market in May when it issued a $1bn 2021 that was priced with 4.875% coupon to yield 4.976% via Bank of America Merrill Lynch, Deutsche Bank and Goldman Sachs. Those bonds were trading around 102.85-103.10 or 4.50%-4.47% last week. On this occasion, BBVA, BNP Paribas and Citigroup are taking the government-owned electricity company on the road.
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UMS Moves Closer to Samurai Sale
United Mexican States (UMS) may issue its Samurai as soon as December as it looks to consolidate its presence in the Japanese market with a transaction that is not guaranteed by JBIC. “Our next step is to issue without a JBIC guarantee and allow [the transaction] to take place in the last month of this year or early January,” Alejandro Diaz, the country’s head of public credit, tells LatinFinance. The sovereign has typically tapped the Samurai market using guarantees from JBIC, but has long hoped to sell plain vanilla bonds in this country. Mexico is flexible on size and tenor depending on risk appetite among Japanese investors, but ideally it is looking at a JPY-40-50bn ($519m-$649m) 5 or 10-year “We understand the first issuance may be in the lower part of the curve and we don’t have a problem with that,” Diaz says The sovereign would follow in the wake of America Movil (AMX), which in October became the first LatAm corporate to issue a Samurai without a JBIC guarantee. At the time, AMX tested the waters with a JPY12bn ($156m) a dual-tranche issue, selling a JPY6.9bn 3-year at par to yield 1.23% or yen Libor+80bp, and a JPY 5.1bn 5-year at par to yield 1.53% or yen Libor+100bp. UMS last issued in the Samurai market in 2010, when it placed a JPY150bn ($1.8bn) 10-year to yield 1.51%. Citigroup, Bank of Tokyo Mitsubishi, and Nomura took the sovereign to meet Japanese investors on a non-deal roadshow in August and will most likely assist with the next Samurai transaction, Diaz says.
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Itau Names Colombia Country Manager
Ramiro Gonzalez-Prandi has been named Itau BBA’s Colombia country manager now that the Brazilian bank has been granted approval to operate a wholesale and investment banking unit in the country. Gonzalez-Prandi was global corporate and investment banking director for Banco Itau Chile, a position he held since 2007. He is being replaced by Christian Tauber, who was in charge of corporate banking and corporate finance. Itau, along with other Brazilian institutions, including BTG, have been shopping in Colombia. Itau was recently said to be a finalist to take the 50% of Colpatria before Scotia bought the Colombian bank in October. Itau BBA operates in Argentina and Chile and has a representative office in Peru.
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India Seeks Larger LatAm Presence
Indians aim to boost involvement in LatAm, as their companies seek high-growth markets as well as new sources of raw materials and agricultural products. Facing demographic trends that suggest a transformation similar to China’s, Indian firms bring different offerings to the table than the region’s more established trading partner, officials tell a LatinFinance panel. Two decades since India embarked on a more open economic policy, India is faced with rising food and energy prices, and like China it is likely to seek investments abroad in these sectors. “It is in food where Latin America will offer the most synergistic relationship [with India],” says TCA Ranganathan, chairman of the Exim Bank of India. For instance, he notes, India has rapidly become a net importer of high value crops such as sugar cane due to water and land shortages. Indian investment flows to LatAm reached about $25bn last year, representing an increase from next to nothing 10 years ago, but it still falls short of the $140bn from China. That India’s global expansion comes through private entrepreneurs, as opposed to China’s government-driven model, may be beneficial to LatAm, Ranganathan explains. “You won’t see a $140bn figure [from India-LatAm],” Ashutosh Maheshwari, CEO of Motilal Oswal Investment Banking. “It’s not the government driving it. These are corporates that are accountable to those from whom they raise money.” This means that Indians are better disciplined and use capital wisely, but are unable to have a 20 to 30-year investment horizon like the Chinese do, he explains. Expertise in services, engineering and other specialty areas is where India is poised to add value, rather than through sheer dollar size. Indian crop-protection company United Phosphorus has already made six investments in the region and appears satisfied with the quality of labor in the region. “The management in Latin America is very mature, very competent and very reliable,” says Vikram Shroff, the company’s ex