Mexican corporates appeared to be taking advantage of improving sentiment in the global markets Tuesday to move forward with bond deals this week before more uncertainty potentially closed windows. State-owned oil concern Pemex for example, sold $740m equivalent of paper Tuesday, while Santander Mexico was set to price a MXP5bn bond issue late Tuesday or this morning. The 2016 notes are expected to pay TIIE+50bp. Santander is leading the sale, rated AAA on a national scale. Also Ford Credit is expected to come to market today, with an up to 18-month MXP1bn bond through Actinver, HSBC, IXE and Scotia Capital.
Category: Regions
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Pemex Raises MXP10bn
Pemex has sold MXP10bn ($740m) in domestic bonds, reaching the market after initially trying to price a MXP15bn offering in early September. The Mexican state-owned oil producer sold MXP7bn in 2017 floating-rate bonds at TIIE+24bp and MXP3bn in 10-year UDI-denominated bonds at 3.55%, or MBonos+95bp. The tranches saw 2.5x and 1.8x demand, respectively. Proceeds from the issue, rated AAA on a national scale, are to be used for investment purposes and to address existing debt. HSBC and Santander are managing the deal, which originally had four banks on it. Pemex last came to the local market when it issued MXP10bn in 5-year bonds earlier this year.
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Panama Sticks to Local Markets
Panama will stick to local bond markets next year to raise about $450m, says Mahesh Khemlani, the country’s deputy minister of finance. That amount is part of about $1.3bn in 2012 financing needs, which will largely be covered through multilaterals. “We are trying to develop the local markets,” adds Khemlani. “There are a lot of banks asking us for international issuance and we are trying to get those investors into the local markets.” The government has established a system for market makers and a global sub-custodian program to create more liquidity and allow international investors to participate in the domestic market. Panama recently retapped a 2018 bond locally, locking in a 3.57% yield. “I don’t think we would have achieved such a good rate in the international markets,” says Khemlani. The sovereign’s last cross-border sale was a JPY41.5bn ($502m) 2021 Samurai bond in January, and it has not issued in USD since 2009.
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ACS Sells Stakes in Chilean Toll Roads
Spanish construction company Actividades de Construccion y Servicios (ACS) has agreed to sell positions in 2 Chilean toll roads to a consortium led by Toronto-based Brookfield Asset Management for EUR216m ($292m). In the deal, ACS sells its roughly 50% stake in Vespucio Norte and its stake in Tunel de San Cristobal. Rotating concession assets, operating them for a short time and selling them to infrastructure or pension funds has always been a part of ACS’ strategy, says an industry analyst, who expects ACS will remain in Chile. “They decided to carefully review all its assets. They decided these are mature enough to be sold and in a time, in a country where there is still some appetite from investors for this type of asset,” the analyst says. The analyst declined to estimate the multiple in the transaction, but notes that 1.5x book value is typical in the sector. A second infrastructure analyst suggests the deal was roughly 2x price to book, which is “more or less an average sector multiple.” A spokesperson at Brookfield pointed out that the company likes the economic outlook in Chile, and toll roads offer in essence a new operating platform for the company. “Brookfield is looking at a number of opportunities to purchase infrastructure in the Americas, in North and South America, from the European companies that are refocusing on their home markets,” he says. Earlier this month Chilean Inversiones Infrastructura Dos acquired 50% of a highway project from Sweden-based Skanska for $42.8m equivalent.
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OHL Mexico in Equity Swap
OHL Concesiones, has raised MXP1.83bn ($133.6m) through an equity swap for shares of OHL Mexico, OHL Mexico says. The 3-year swap is equal to 6.3% of its stake, and OHL has the option to buy back the shares at the end of the period. OHL concesiones owns 51% of OHL Mexico, after floating it in an IPO last year. OHL officials were unavailable for additional comment on the exact terms and identity of the counterparty.
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Italians Consider Chilean Toll Road IPO
Italian infrastructure investment firm Atlantia has been holding meetings with Chilean investors regarding the potential IPO of toll road assets, according to market participants. The discussions are said to be preliminary at this point, especially given overall volatile market conditions, but the company is interested in floating part of its toll road package – though which roads would be involved is unclear. Credit Suisse, Goldman Sachs, Santander and UBS are said to be managing the process. Atlantia directly or indirectly owns 50% or greater stakes in 8 Chilean concessions and 1 Brazilian concession, according to its website. Earlier this year it paid $639m equivalent for stakes in 3 Chilean roads from Spain’s Acciona.
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Banco de Bogota Selects Banks
Banco de Bogota, Colombia’s second largest lender, has selected Citi, HSBC and JPMorgan for an international bond sale, CFO Maria Luisa Rojas Giraldo tells LatinFinance. Last year, the mandated banks provided the bank with a $1.2bn 1-year bridge loan to help acquire BAC – Credomatic, a sizable Central American bank that represents half of Banco de Bogota’s assets. Giraldo says the bank is estimating an October issuance for its debut $1bn 10-year bond to replace the bridge loan, if market conditions permit. Moody’s has assigned a Baa2 rating with stable outlook to the proposed $1bn 10-year bond. This would be the bank’s debut USD bond issuance.
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Mexico Awaits Samurai Feedback
A Samurai bond without a JBIC guarantee is still on the cards for Mexico, but it appears that timing could be pushed back given the unease pervading market sentiment. “For us this is a medium-term strategy,” Alejandro Diaz de Leon, the country’s head of public credit, told LatinFinance on the sidelines of the IMF meetings in Washington over the weekend. “We want to have Japanese investors as a regular part of our external portfolio. We are committed to that but we are mindful of market conditions and clearly don’t have a particular deadline for that transaction.” Mexico has been engaging Japanese accounts about the idea of issuing a bond without a JBIC guarantee, marking the next natural step for a sovereign that has already sold debt in Japan with the support of the public financial institution. This time it is heard eyeing a tenor in the 5-year range. Up until now, Mexico has sought longer maturities but with the aid of a JBIC guarantee, most recently selling JPY150bn ($1.8bn) of 10-year bonds at a 1.51% yield in October. “We still haven’t received the final feedback from investors. In the next week we will have a clearer picture in that regards. For us it is clearly on the table and it is a question of when we can do it in a way that all parties involved feel successful about the transaction,” Diaz said.
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Pemex Back with Smaller Domestic Jumbo
Pemex has reemerged with plans for a domestic bond issue, and is set to sell up to MXP10bn ($739m) with pricing expected today, say bankers managing the deal. The Mexican state-owned petroleum company is giving the domestic market another try after postponing the multi-tranche deal earlier this month, that was to be up to MXP15bn. Today, Pemex is set to choose among 7-year floating-rate and 15-year UDI denominated bonds. “Because of market conditions Pemex has decided not to issue fixed-rate bonds,” according to a banker on the deal. Proceeds from the issue, rated AAA on a national scale, are to be used for investment purposes and to address existing debt. HSBC and Santander are managing the deal, which originally had four banks on it. Pemex last came to the local market when it issued MXP 10bn in 5-year bonds earlier this year.
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VW Bank Plans to Tap Mexican Market
Mexico’s Volkswagen Bank plans to raise up to MXP7bn ($516m) in the domestic bond market, according to a regulatory filing. The bank has the option of fixed or floating rate notes. Proceeds are marked for funding operations. HSBC and Santander are managing.