Banco de Credito BCP has signed a 5-year $150m loan with China Development Bank, marking the Peruvian bank’s first such transaction with CDB. The move represents an opportunity for financing and also for strengthening relationships with China, says BCP. The spread over Libor was not disclosed.
Category: Regions
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Bancolomia Mulls $150m Sura Investment
Bancolomiba is considering a $150m investment in pension and insurance assets that Grupo Suramericana recently acquired from ING, the bank says. Sura had indicated the possibility that the bank would participate as a co-investor along with the IFC, Sociedades Bolivar and UBS, its advisor on the acquisition. Bancolombia acted as bookrunner on the recent COP3.5trn ($1.8bn) equity follow-on that helped fund the purchase of ING’s assets. “The operation is an interesting business opportunity, aligned with the ongoing interest that Grupo Bancolombia has in strengthening its presence in the financial sector, including pensions,” it says. Final details are still to be determined. Sura brought in the co-investors as its follow-on fell short of a COP3.9trn target. UBS came in for COP975bn, Bolivar for $400m and the IFC $200m. Sura agreed to buy the ING assets in July for $3.76bn.
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ISA Preps Local Bonds
Colombia’s ISA is set to sell COP300bn ($154m) in domestic bonds Thursday. The utility plans a 12-year and a 30-year linked to the IPC. Citi, Corredores Asociados, Correval and Interbolsa are managing the sale. ISA is rated AAA on a national scale.
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Urbi Price Talk Heard
Mexican homebuilder Urbi Desarrollos Urbanos (URBI) is heard looking to pay TIIE+ 350bp area on a MXP1bn ($74.5m) 2014 bond. Issuance has been tentatively scheduled for next week. Proceeds will be used to refinance debt and for general corporate purposes. The offering is rated A- on a local scale. BBVA is managing the sale.
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AMX to Test Dim Sum Market
America Movil (AMX) has mandated HSBC to arrange 2-day fixed-income investor meetings in Asia starting next week amid expectations that the veteran LatAm borrower may try its luck in the so-called dim sum market as it seeks out new pools of liquidity. “There is a lot of money in Asia and issuers are continuing to look at ways to access those markets,” says one DCM banker. “AMX is consistent with diversifying its financing needs and is a more sophisticated borrower with an uncanny ability to read the tea leaves.” This comes just a month after AMX broke new ground by debuting in the Japanese market and becoming LatAm’s first corporate issuer to sell a Samurai without a JBIC guarantee. Now the Mexican telecom may well be the first to test Asian investors’ appetite for RMB-denominated paper from LatAm credits, though Brazilian names such as Bradesco and Vale have also been heard considering such an option. Given the deep pools of liquidity in Asia, it makes sense that borrowers with large capital needs such as AMX are considering engaging investors there as they look to diversify their funding bases and ease pressures on core dollar markets. “AMX has significant capital requirements so there is only so many times it can tap the USD and EUR market,” says another DCM banker. According to a banker familiar with the RMB-denominated market, dim sum issuances have varied in size between $30m-$200m with tenors ranging between 2 to 4 years. In 2010, McDonalds became the first non-Chinese entity to issue a dim sum bond, selling a relatively small RMB200 million ($29.5m) 3% 3-year. Last year companies placed 30 dim sum deals totaling RMB40bn. Volumes are expected to exceed those levels in 2011 with some bankers believing that the dim sum sector will become a core funding source for many borrowers in 20-30 years time. “It’s a nice way for AMX to make foothold now,” a banker says. The A2/A minus/A rated company will hold meetings in Singapore on Monday, December 5 before wrapping u
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Brazil’s Safra Takes Majority Stake in Swiss Bank
Brazil’s Safra Group agreed to acquire from Rabobank a majority position in Switzerland’s Bank Sarasin. Safra does not disclose the total value or the number of shares involved, but says it acquires a 46.07% equity interest and 68.63% of the voting rights, paying an all-cash price of CHF7.20 for class A shares and CHF36.00 for class B shares. Sarasin’s total shareholder equity stands at CHF1.2bn ($1.3bn) as of 1H2011, according to bank documents. Safra officials declined to give any additional specifics regarding valuation or the advisors involved in the deal. Officials for Rabobank and Sarasin say the deal allows Sarasin to further focus on its private banking business in Europe, the Middle East and Asia.
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LatAm Preps for European FI Deleveraging
LatAm remains relatively well protected against European bank deleveraging despite the region’s obvious exposure to potential problems in the continent’s financial system, say analysts. Lending costs are already increasing as a result, but regulators are guarding themselves against sudden parent remittals. Arguably Chile is the most vulnerable with eurozone bank claims amounting to anywhere between 34%-40% of GDP. “Clearly, a problem with the Spanish banking system could amplify the liquidity crunch in the region, especially in Chile, but we do not believe it will be widespread if local banks do not partake in the crunch,” says Barclays Capital. According to the shop, European bank claims in the region amount to just 14.5% of GDP against 30% in EM Asia and 62% in EEMEA. Still European banks have been the dominant lenders in the cross border loan market in recent years, and their absence will clearly be felt. According to RBS, cross-border claims in LatAm from both European and UK banks reached about 67% of total foreign bank claims as of June 2011. This compares to just 5% from Asian banks, though their share has been accelerating over the last 11 years as trade links between the two regions grow. The withdrawal of European institutions is also being felt in the trade financing universe, where costs have increased substantially over the last few months. “Spreads are going up. In July-August they were paying 70bp-75bp for a new 1-year [trade financing line] and now it is 100bp,” said one banker earlier this month. Outflows through profit and dividend remittals by the parent is another source of risk, according Barclays, which notes that such outflows increased by 51% in Brazil during the 2007 crisis when both financial and non-financial institutions repatriated funds to headquarters. A similar scenario could unfold this time around as European banks move to meet 9% Tier 1 recapitalization plans, Barclays adds. That said, local regulators have prepared themselves agai
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Ternium Usiminas Buy Prompts Questions
Ternium’s agreement to acquire a BRL5.03bn ($2.7bn) stake in Brazil’s Usinas Siderurgicas de Minas Gerais (Usiminas) has left analysts scratching their heads. The global steelmaker will pay BRL36.00 per share for 139.7m common shares, or 27.7%, in a transaction seen as expensive. The price compares to a BRL19.70 previous closing price, and represents an enterprise value of 25x 2012 Ebitda. “Typically, Ternium has paid reasonable multiples of 6x in previous M&A transactions,” Luis Fornari, analyst at Barclays, tells LatinFinance. Usiminas’ stock trades at roughly a 50% premium to similar companies at an EV/2012 Ebitda of 10x. At these new levels, Fornari says, many investors are trying to understand Ternium’s reasoning. Ternium officials told analysts that access to the Brazilian market was a key motivation as well as the possibility of joint iron ore investments with Usiminas. Ternium’s interest in slab production in Brazil may also be misguided. Exporting slabs from Brazil is not profitable, says Fornari, and the domestic market is already well supplied. In the deal, Ternium acquires 84.7m common shares, its Siderar unit acquires 30m and its TenarisConfab unit acquires 25m. The three are buying the shares from Grupo Votorantim and Camargo Correa – both of which had been seeking an exit – and from the Caixa dos Empregados Usiminas, the company’s pension fund. Ternium and Siderar will finance their BRL4.1bn portion through cash on hand and debt, Ternium says, without offering further details. Officials at Ternium and Usiminas could not be immediately reached for comment regarding financing details or advisors on the deal. The deal brings Ternium into the controlling block, it says, of which Japan’s Nippon Steel holds 46.1%, Ternium 43.3% and the employee pension fund 10.6%. Nippon Steel has also raised its stake in the company by purchasing 8.5m common shares from the employees’ pension fund, Ternium says. Usiminas shares have climbed of late as Brazil’s Companhia
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Axtel Sees Rating Reductions
Mexican telecommunications company Axtel has had its ratings lowered by S&P and Moody’s, according to each agency. S&P dropped its corporate credit rating to B from B+. It points to competition and marginal revenue growth, as well as the expectation that Axtel will continue seeing free operating cash flow deficits due to its capital expenditure program, as part of the rationale behind the reduction. The outlook is stable. Moody’s, meanwhile, downgraded Axtel to Caa1 from B3. Moody’s notes that Axtel faces a challenging competitive environment and a tight liquidity position. The outlook is negative.
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Isagen Gets I-Grade Mark from S&P
S&P has assigned a BBB minus rating to Colombia’s Isagen, it says. The agency notes the power generation company’s sound financial metrics, strong competitive position and prudent debt management. It also highlights Colombia’s favorable institutional and regulatory frameworks, as well as likely government support in the event of financial distress. The outlook is stable. Isagen has yet to issue in the international bond markets, but has said it would like to make an approximately $500m debut likely in 2012.