Timing on a new bond from Colombian utility Empresa de Energia de Bogota (EEB) remains unclear ahead of a looming October 31 call date on its outstanding $610m of 8.75% 2014s. The company has mandated Deutsche Bank and Santander with the idea of raising proceeds through a bond transaction to take out the existing instruments once the call is exercisable. But much will depend on how markets react to any news out of Europe this week and whether politicians there can present a euro-zone rescue plan that will calm investors’ nerves. Markets ended on a high note Friday and bankers were predicting several new bond deals this week if market conditions were benign. EEB spokespeople were unavailable for comment. The 2014s were bid Friday at around 6.86% on a yield-to-worst basis. The NC4 senior unsecured notes were issued in 2007 to partially pay down a bridge loan used to finance the $1.5bn acquisition of natural gas distributor Ecogas. The bonds are callable in October at 104.375, at 102.188 in 2012 and at par in 2013 and thereafter. They also carry a make-whole call prior to year four at 75bp and a change of control put at 101.00. ABN AMRO, now RBS, was the sole bookrunner on the last issue with BBVA, Caylon and Mizuho working as joint lead managers.
Category: Regions
Ecuadorean Dairy Plans IPO
Holding Tonicorp, an Ecuadorean dairy producer, is preparing an IPO to raise $74m-$87m, according to a broker managing the transaction. In what appears to be the country’s first IPO in at least five years, Tonicorp plans to float 30%-35% of itself, or 12.4m-14.4m shares, at an offering price of $6.00 each. The IPO is set to open on Wednesday. While bankers have been forecasting that borrowers are unlikely to come with more IPOs this year, they may have overlooked how small markets like Ecuador’s remain somewhat insulated from the broader turmoil abroad. Local brokerage Inmovalor Casa de Valores is managing. Tonicorp, controlled by the Alarcon family, owns Industrias Lacteas Toni, and also Plasticos Ecuatorianos and Dipor, which produce, package and distribute Toni’s dairy products. Combined sales from the 3 companies are forecasted at $274m next year, up from a projected $252m this year, and are expected to reach $380m by 2016.
Dismissal of Sacyr Chairman Threatens Pemex Pact
Pemex’s drive for more decision-making power in Spain’s Repsol is in doubt, following the firing of the chairman of Sacyr-Vallehermoso, the Spanish construction firm. The two companies had combined forces in an effort to acquire a 30% stake in the Spanish oil company and vote as a block. Ultimately disapproval of the plan led to Chairman Luis Del Rivero’s dismissal last week Pemex could only bring its position to 9.49%, falling short of the 9.8% stake required in the agreement with Sacyr-Vallehermoso.
UNE Raises COP300bn
UNE EPM Telecomunicaciones, the telecom unit of Colombia’s Empresas Publicas de Medellin, has raised COP300bn ($153m) through a domestic bond issue after seeing COP400bn in demand. A 150bn 2016 tranche pays IPC+3.67%, and a COP150bn 2023 portion pays IPC+4.76%. Correval managed the sale, rated AAA on a national scale. Next up in the Colombian market is Findeter, planning COP200bn on Tuesday.
Scotia Buys Colpatria Stake
Colpatria has agreed to sell a 51% stake to Canada’s Scotiabank in a transaction valued at around $1bn, putting an end to months of speculation over which foreign entity would lay claim to Colombia’s fifth largest financial group. It is thought to have paid a premium to expand its presence in Colombia, but it beat out other interest parties in a market with increasingly fewer M&A opportunities. Brazilian banking powerhouses Itau and Banco do Brasil were also heard expressing interest, but in the end Scotia took poll position after agreeing to pay $500m in cash and 10m shares for the stake. Colpatria also has the option to sell Scotia the remaining stake at a “fair value” after 7 years. The 10m shares were worth $510m at the previous CAD51.73 closing price. Bank officials spot the P/E valuation at 12x and the price/book at 3x, while analysts see it at 3.0x-3.6x “There is a big potential for growth in Colombia, and Scotia sees it. It is a high valuation compared to the regional average,” Felipe Toro, FIG analyst at Interbolsa, tells LatinFinance. He sees the price/book value at about 3.6x, compared to a regional average of about 2.6x for banks. With the purchase Scotia bank is buying a bank with a market share of just 5%, but officials at the Canadian bank highlight the 20%+ credit growth in Colombia. It also point to Colpatria’s strengths in mortgages and credit cards, which expands Scotia’s scope beyond its corporate focus. “Canadian banks came out well from the financial crisis. Unlike internationals from other parts of the world they aren’t pulling out, but are retrenching in the region,” says a New York-based FIG analyst. He notes price/book valuations in Colombia vary a bit, with Bancolombia at 2.2x and Davivienda at 1.7x, but generally they are higher than the Latin American average. “Colpatria is an attractive asset in Colombia, as it is dedicated to low-income consumers. Also, the opportunities in this consolidating market are getting fewer and fewer,” he add
Colombia Eyes Samurai in 2012
Colombia is taking steps to potentially issue in the Samurai bond market in early 2012, says Miguel Angel Gomez, capital markets advisor at Colombia’s ministry of finance. “We have completed our financing needs for this year, but we are analyzing and starting the process in the next couple of months for a potential transaction in 2012.” The sovereign, which has yet to mandate banks, met with Japanese investors in September. While a specific amount has yet to be determined, the sovereign would be interested in a structure similar to its 2009 Samurai transaction when it placed JPY45bn ($503m) in bonds privately with Japanese investors, says Gomez. The 2019 Samurai issue was sold at par with a 2.42% coupon, for a yield 93bp over JPY swaps. The AA rated transaction came with a JBIC guarantee; with proceeds used to help fund the sovereign’s 2009 budget needs. Mitsubishi UFJ Securities and Daiwa Securities SMBC managed the 2009 transaction. As part of diversification efforts, the sovereign will also consider a USD and EUR transactions for next year.
AMX Debuts in Samurai Market
America Movil (AMX) has raised JPY12bn ($156m) through in dual tranche issue, marking its debut in the Samurai market. A 3-year JPY6.9bn tranche was sold at par to yield 1.23% at yen Libor+80bp, while a 5-year JPY 5.1bn bond was priced at par to yield 1.53% or yen Libor plus 100. Both priced in line with earlier guidance of yen Libor+70-90bp for the 3-year and +90bp-110bp on the 5-year. “This is the first time a Latin America corporate has tapped a Samurai transaction without a JBIC guarantee,” notes a person familiar with the transaction. The deal marks the first corporate issuance in this market in about five years, and should pave the way for other LatAm issuers to follow suit. The Samurai follows AMX’s $2bn 5-year bond and $750m retap of its 2040s in which it locked in the second lowest coupon ever achieved by a telecommunications company. AMX issued a CHF270m 2016 bond in August that came with a reoffer price of 99.775 to yield 2.039%, or mid swaps plus 86bp. The Samurai transaction was led by Mitsubishi UFJ-Morgan Stanley and Mizuho. This comes after America Movil also recently met investors in Europe via Deutsche Bank. Japan Credit Rating Agency has assigned an A rating with stable outlook to Japanese yen-denominated bonds from America Movil (AMX). AMX is rated A2/A/A.
Credito Real Files Shelf
Mexico’s Credito Real has filed a shelf to issue bonds in Mexico’s domestic bond market. The preliminary filing gives no timing and size details. Ixe will be managing the transaction.
Advent Opens Colombia Office
Private Equity firm Advent International has opened an office in Bogota. The office is to focus on buyouts and growth equity investments in sectors including pharmaceuticals, retail, energy, financial services and services for the mining and oil and gas industries. Managing director and Advent Mexico veteran Diego Serebrisky is heading the new operation.
Davivienda Launches FO
Colombia’s Banco Davivienda has opened the subscription period for a domestic equity follow-on, as it seeks to raise COP480bn-COP800bn ($253m-$422m). The mortgage specialist-turned-broader lender plans to sell 24m-40m shares, at a price of COP20,000 each, through November 10 with allocation by November 25. The bank is raising funds to grow and keep up with the expansion of other Colombian FIGs. It has its eyes on operations in other countries including Peru, and an eventual ADR listing and 144a bond offering. Corredores Associados is managing the follow-on. The bank is the latest Colombian blue-chip to hold a follow-on targeting domestic retail investors in a market somewhat insulated from global equity turmoil. Retailer Almacenes Exito hit its COP2.502trn follow-on target last month, and Empresa de Energia de Bogota is set to close a COP700bn follow-on next week. Ecopetrol’s deal hit a rough patch in July, but still raised COP2.4trn out of a COP2.5trn target. Davivienda raised $228m equivalent in an IPO last year.