European banks are increasingly shedding USD asset in the Latin American secondary loan market as they look to comply with capital requirements and retrench in the region, say bankers. But so far the sell-off seems to be an orderly one as there is more than a fair share of willing buyers, particularly among local institutions. Traditionally the domain of investments banks looking to reduce exposure to certain credits, the LatAm secondary loan market has arguably received a boost from increased activity with prices largely falling in line with CDS levels. “It is not a fire sale,” says one banker. “There is not too much portfolio dumping, and sales are $5m, $10m and $15m [in size]. Local banks, whose cost of funding is relatively high in dollars, are heard taking advantage of such sales to stock up on credits they like.
Category: Regions
Facileasing Plots Local Issue
Mexico’s Facileasing is preparing to issue up to MXP1bn ($74m) in the domestic market. The 3-year bonds will pay a spread over TIIE. BBVA Bancomer, whose parent company owns the Mexican vehicle fleet leasing company, is managing the sale. An issuance date has yet to be determined. Facileasing is rated AAA on a national scale.
Pemex Preps MXP Bond
Mexican state-owned oil company Pemex plans to issue up to MXP10bn ($735m) in the domestic market, market conditions permitting, says a Pemex spokesperson. “Given the current volatility, windows have been opening and closing quickly. When the next window opens we will look at executing a transaction,” he adds. So far, Pemex has filed its next proposed issuance under its MXP200bn bond program with Mexico’s CNBV. The proposed MXP10bn fixed-rate bonds will carry a 10-year tenor and will be guaranteed by Pemex-Exploracion y Produccion, Pemex-Gas y Petroquimica Basica and Pemex-Refinacion, according to Moody’s. The ratings agency has assigned a Baa1 global scale local currency and Aaa.mx national scale ratings to the deal. Pemex last sold a total of MXP10bn ($740m) in floating and UDI-denominated bonds in September. The MXP7bn 2017 floating rate bonds priced at TIIE +24bp and MXP3bn in 10-year UDI-denominated bonds came at 3.55%, or MBonos+95bp.
Scotia Makes Mexico DCM Hire
Scotia Capital has hired Roberto Guzman as director, debt capital markets, Mexico. Guzman previously worked as director of structured finance at Fitch Ratings, where he covered residential mortgage backed securities, commercial mortgage backed securities, asset backed securities and future flows issuances. He reports to Vinicio Alvarez, managing director, debt capital markets Mexico. Scotia was recently mandated, along with Bank of America Merrill Lynch (BAML) and HSBC, to take Mexican state-owed oil company Pemex on investor meetings in Canada.
Cofide Revives Bond Issue
Peru’s development bank Cofide could roadshow its long-awaited $500m 144a/RegS 10-year as soon as December, though January may be a more realistic option, say officials at the development bank. The deal has been on the backburner since Ollanta Humala’s victory in the June elections left much uncertainty about how the newly elected left-wing president would steer the economy. Now with those concerns somewhat assuaged, Cofide is ready to move forward after completing talks with auditors. Officials see a final spread of 150bp over the sovereign as acceptable, though tighter pricing would be better. Deutsche Bank and JPMorgan have been mandated on the trade.
AMX Reaches 93% of Telemex
America Movil has reached 92.8% ownership of Telemex, according to preliminary results of its public offer to buy up the 40% it didn’t already own. About 5.9bn Telmex shares were tendered in a transaction that should cost AMX about MXP62.15bn ($4.58bn). AMX offered MXP10.50 per share, and plans to delist Telmex, as part of a reorganization effort to get all of the Mexican billionaire Carlos Slim controlled telecom assets under one roof.
Bancomer Files Multi-Currency Shelf
Mexico’s BBVA Bancomer has filed a shelf to raise up to $1.5bn equivalent in various currencies. The structured bank bonds may be issued in MXP, USD, EUR, PEN, CLP, or COP, as well as the UDI or UF inflation linked units. The Mexican banking unit of Spain’s BBVA does not give details as to timing or size of any specific issuance.
Trafigura Preps Launch of Asset-Based Loan
The Mexican subsidiary of global trader Trafigura could launch an up to $350m 1-year asset-based loan into general syndication as soon as this week after wrapping up roadshows among Latin American banks. Bookrunners are BNP Paribas, Bladex and Scotia bank, with Banco do Brasil also heard participating. The structure is unusual for LatAm investors, but Trafigura is heard looking to diversify its funding base beyond its relationship lenders. Size will be based on a percentage of the underlying worth of the collateral, which in this case will be metal inventories and receivables. The structure requires the borrower to consistently demonstrate it holds a sufficient amount of assets to support the loan. While rare in LatAm, the structure has been used in a similar manner in Colombia, where BNP Paribas also led a $180m reserve-base facility for Pacific Rubiales to finance oil and gas exploration. In that case, the value of the borrowing base was amended twice a year. Trafigura is one of the world’s largest independent traders in the oil and non-ferrous concentrates markets.
Davivienda FO Demand Tops $370m
Colombia’s Banco Davivienda has seen orders reach COP716bn ($373m) in its equity follow-on, reaching close to the upper end of the COP480bn-COP800bn it is authorized to raise during the sale period ending November 10. Details on final allocations and size will be released by the end of the month. Davivienda launched the FO October 20, offering 20m-40m shares at COP20,000 each. 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.
LatAm Watches for European Contagion Risks
After dodging a bullet in 2008’s financial crisis and subsequently fixing vulnerabilities exposed during that period, LatiAm policymakers feel more prepared than ever to face future contagion risks. Events in Europe, however, are being watched with increasing unease amid the realization that the continent’s debt predicament will eventually wash upon the region’s shores. Weakness in the commodity complex, volatility in the FX rates, and a lengthy lull in capital markets activity are just some of the areas of susceptibility for LatAm. For now at least, the immediate horizon looks stormy but manageable. JPMorgan estimates that LatAm growth should dip to 3.2% in 2012 from 4.0% this year, putting it behind its 3.6% potential, but not by far. “Needless to say, we will experience some turbulence because of the interconnectedness of the global financial market, but we feel our main financial variables will be anchored by the strong fundamentals,” Augustin Carstens, Mexico’s central bank head, told LatinFinance earlier this year. Though the region is still reliant on foreign capital, the development of local markets means borrowers now have an important alternative funding pool. However, successes on this front have created their own challenges at a time when foreign investors have become increasingly enamored by local currency plays. These often crowded trades leave countries once again exposed to sudden movements in international portfolio flows. “A lot of the selloff has been in those countries where the foreign position has been highest,” says Joyce Chang, head of emerging markets and global credit research at JPMorgan. Indeed, the notion that LatAm can decouple from events in G3 countries has been broadly rejected. “Under the current conditions, there is a pretty good external backdrop for the most part,” says Javier Kulesz, chief economist for Latin America at UBS. “But if we move to a more hostile environment, LatAm will not decouple.” Balance sheets and reserves migh