Empresa de Energia de Bogota is looking to raise COP700bn ($364m) through an equity follow-on, with plans to sell 538.5m shares at COP1,300 each. The Colombian utility has not yet indicated when it will begin the sale period, as it is still awaiting final regulatory approval. The per share price represents a 7.14% discount to Friday’s COP1,400 close, and comes at a 10.65% discount to the COP1,455 level that EEB says is the average price over the last 3 months. EEB plans to use the proceeds from the offering to fund its expansion plans. Corredores Asociados is lead manager.
Category: Regions
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Ideal Plans MXP Foray
Mexico’s Impulsora del Desarrollo y El Empleo en America Latina (Ideal) is preparing a domestic bond transaction. The Carlos Slim infrastructure vehicle is aiming for a MXP4bn ($288m) 2014 bond paying a spread over TIIE. The regulatory filings indicate an expected October 20 pricing. Inbursa is listed as the only lead at this point, though Slim companies usually add additional banks at a later date. The sale is not yet rated. Ideal had planned to raise MXP6.14bn in July through an equity follow-on via Banamex and Inbursa, but market conditions appear to have delayed this process, along with all other new issuance in the Mexican pipeline.
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KCSM Amends and Extends
Transportation company Kansas City Southern de Mexico has amended and restated a $100m loan due 2013 by securing a $200m credit facility that expires 2016. JP Morgan and Bank of America Merrill Lynch, acted as joint lead arrangers. Those two banks along with BBVA also acted as joint bookrunners, while RBS, Citibank, Comerica Bank, Wells Fargo and Scotia Capital came in as lenders.
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AMX to Make Rounds in Europe
LatAm telecom giant America Movil (AMX) will kick off fixed-income investor meetings this week in Europe. It is thought that a deal could possibly emerge depending on market conditions. The borrower will be in London on Tuesday, in London and Edinburgh on Wednesday, in Paris and Amsterdam on Thursday and in Frankfurt on Friday. The investor circuit suggests that AMX may be eyeing another euro trade, though no details have been released. Bankers have been saying that markets are open for top names like AMX if they can pick the right window. They will also have to turn a blind eye to high new issue premiums and instead find comfort in the attractive yields being offered in a market where rates are still low. Both the high-grade euro and dollar markets have seen some activity of late, and other LatAm borrowers are heard to be eyeing euros as well, but the unpredictability of investor behavior makes execution particularly difficult. Friday’s sharp drop in equity prices was just another reminder of this. Borrowers clearly run the risk of sentiment suddenly turning against them once they have announced a deal. Still if any LatAm issuer can pull off such a trade it is the single A rated America Movil. It was last in the market in late August when it sold a $2bn 5-year bond and a $750m retap of its 2040s a week ahead of a September rush that never happened. The company most recently tapped European investors in late August via Credit Suisse, with a CHF270m ($350m) 2016 that came at a reoffer price of 99.775 to yield 2.039%, or mid-swaps plus 86bp. On this occasion, Deutsche Bank is taking the telecom on the road next week. The same bank, along with HSBC and BNP Paribas, brought AMX to the European markets in June 2010 with EUR/GDP bond transactions. At that time, it priced a EUR1bn 2017 at 99.276, with a 3.750% coupon, to yield 3.870%, or mid-swaps plus 135bp, as well as a EUR750m 2022 at 98.902, with a 4.75% coupon, to yield 4.873%, or mid-swaps plus 175bp.It also raised G
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Mexico Moves to Contain Rise in Sub-national Debt
Mexico must enact measures to tame rising state and municipal short-term debt levels, say panelists at LatinFinance’s Infrastructure and Sub-Sovereign Summit in Mexico. This comes as the state of Coahuila this week closes negotiations with lenders to head off a default on short-term loans amounting to MXP34bn ($2.4bn) after only disclosing MXP8bn in debt. Coahuila’s situation underscores the need for greater transparency among Mexican states. Coahuila’s creditors have agreed to be paid back over a 20-year period through federal transfers and payroll taxes owed to the state. The new 20-year loan comes with a 2-year grace period and pays a spread of TIIE +275bp, says a person familiar with the negotiations. A settlement between the state and lenders is expected to conclude today, says Carlos Garza Ibarra head of coordination with federal entities at Mexico’s ministry of finance. Mexico’s congress is currently analyzing three initiatives presented to curb rising state and municipal short-term debt and to resolve discrepancies in financial reporting. “The debt reported by banks to Mexico’s CNBV differs from what states are reporting to the ministry of finance,” says a person familiar with the situation. “There needs to be more transparency and regular financial updates.” The states of Chihuahua, Tabasco, and Chiapas have also been highlighted as borrowers with similar discrepancies in their financial reporting, the person adds. “[Debt] hasn’t reached the levels seen in other LatAm countries, and there is still time to take a look at the situation now,” says Gerardo Carillo, director of public finance at Fitch Ratings Mexico. Mexico’s states long-term debt represents only 3.1% of GDP, jumping to MXP320bn from MXP200m. While such debt is still manageable, Mexican states face an adverse financial environment in the medium term as long as indebtedness continues to rise, the agency says.
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Uruguay’s Monte del Plata Secures $1bn Plus
Uruguayan pulp mill project Montes del Plata, a joint-venture between Stora Enso and Arauco, has raised $1.354bn in the loan market. The financing package consists of a $900m 12-year ECA tranche, a $200m 12-year B loan from the IDB and a $254m commercial B loan. ECAs included Finnish export credit agency (FEC), and Sweden’s SEK. The new pulp mill at Punta Pereira is being financed through equity and loans, and is expected to be up and running by the first quarter of 2013.
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Soriana Plans Local Bond
Mexican retailer Soriana is preparing to sell up to MXP4bn ($297m) in domestic bonds. The 2014 notes would pay a spread to the TIIE, and the sale is expected to take place on October 26. Banamex, JPMorgan and Inbursa are managing the deal, which still remains to be rated.
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Colombia Set for Rate Decision
Analysts are expecting Colombia’s Central Bank to keep the country’s benchmark rate at 4.5% just like it did at the last meeting in August. Monetary authorities lifted rates higher between February and July this year, hiking them from 3% to 4.5% before pausing. “Part of the explanation as to why we [raised rates] was related to what we were seeing in credit growth and also real-estate prices,” Colombian Central Bank President Jose Dario Uribe told LatinFinance at the IMF meetings in Washington last weekend. Asked about interest rate policy going forward, Uribe said: “You take the decision based on all the information you have available at that moment. We will see what happens. The main uncertainty is what is going to happen in Europe.” With inflation at around 3.2%, price appreciation is within the 2-4% target, he noted.
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ICA Lands First Mexican Domestic Project Bond
Two units of ICA have raised MXP7.1bn ($518m) to construct two prisons in what is being called Mexico’s first domestic market project bond. The 20.8-year deal is backed by contracts that ICA’s Sarre and Papagos units have with Mexico’s secretary of public safety to build and operate prison facilities. Bankers on the deal say it is the first time an infrastructure project bond has been completed in Mexico using assets that have yet to be built and that don’t yet generate any revenues. A peso-denominated MXP5.32bn tranche was priced at a fixed rate of 10.1%, while an UDI-denominated MXP1.78bn tranche came at 5.65%. “The key is the contract the issuer has with the government entity,” says a banker on the deal who calls it “debt friendly.” The structure is stronger than most of deals of this kind, carrying provisions to ensure debt payments under a number of potential negative scenarios, a banker says. Funding for such a project would have previously come through the loan market, perhaps with an eventual bond takeout after construction. Although the structure is attractive to infrastructure players and to long-term investors, it remains to be seen whether it can be replicated in other areas such as water projects or toll roads, where operational risk may be more acute. “At the end of the day you are buying a Mexican government warranty,” says another banker on the deal, He adds that the sector is unimportant as long as it has government support, and expects another public service contract securitization in the market within the next year. ICA was aiming for a MXP8.3bn size, but demand fell a bit short, and bankers note that a retap could be in the cards once market volatility subsides. Afores and insurance companies represented most of the buyers. HSBC, Bancomer and Santander managed the sale, rated AAA on a national scale.
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No Renegotiation of Covenants, Says Cemex
Cemex plans to sell off $1bn in non-core assets by the end of next year, according to remarks by CEO Lorenzo Zambrano in a company presentation. The executive also reaffirmed that the company will continue to comply with the covenants of its 2009 refinancing agreement, and said Cemex doesn’t plan to renegotiate terms. Cemex debt stands at $18.4bn as of June.