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.
Category: Regions
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.
Carvajal Increases Stake in Panamanian Packer
Colombia’s Carvajal International has reached 82.84% control of plastic packaging maker Sociedad Peruana de Moldeados (Pamolsa) for a total of $52.3m. It has bought the shares in the open market to increase its holding by 37.6%. The move follows a deal agreed in October 2010, in which Carvajal exchanged a 60% stake in Colombiana de Moldeados with investment firm Fama for a 37% stake in Pamolsa.
Panama SWF Law Expected Next Year
The Panamanian government hopes to pass a law approving a new sovereign wealth fund by the first semester of next year, Mahesh C. Khemlani, the country’s deputy minister of finance, told LatinFinance on the sidelines of the IMF meetings in Washington. The idea is to put any excess dividends from the Canal and other government projects into the fund, which could reach around $7bn in size by 2020, he added. The fund will act as savings for future generations and as a stability mechanism should the country, for example, suffer from fiscal imbalances. “This will reduce our dependency on debt,” he adds. The Panama Canal produces dividends equivalent to 3% of GDP, or around $1bn a year, and that could reach $5bn a year by 2025, Khemlani adds. The country has also discovered oil and has the largest undeveloped copper reserves in the world, he adds. Asset allocations have yet to be decided, but Khemlani sees much of it being invested abroad.
Kiwi Uruguay Dairy Farmer Seeks Equity
NZ Farming Systems Uruguay, the New Zealand-registered Uruguayan dairy farmer, is planning to raise $120m via an equity rights offering. With an $85m loan from Olam, the Singapore-based agricultural firm which owns 86% of NZ, due in December, NZ says it must raise the equity or upsize the facility to $110m and extend its term. The matter will be put to a shareholder vote November 4. Olam has indicated it would exercise its rights in the sale, to be priced at $0.70 per share. Olam had offered minority holders this price in April when it sought and failed to take its ownership above the 90% threshold needed to delist NZ.
Ford Mexico To Price This Week
Ford Credit de Mexico anticipates pricing as soon as Tuesday on an 18-month floating-rate domestic bond. The auto finance services company plans to issue up to MXP1bn ($76m). Price talk is in the TIIE + 100bp range. This will be Ford Credit’s first bond transaction in the local markets since 2007. Actinver, HSBC, IXE, Scotia Capital are managing the transaction, rated A2 on a national scale.
ICA Transfers Road Assets
ICA has sold 2 road concessions to the Red de Carreteras de Occidente (RCO) concession operator in which it owns a minority stake, for MXP2.15bn ($157m). ICA will get MXP1.8bn immediately for 100% of the Concesionaria de Vias Irapuato Queretaro and Concesionaria Irapuato La Piedad, and MXP350m in RCO shares if certain conditions are met. The additional shares would raise ICA’s stake to 18.7% from 13.6%.
Paraguay Eyes Market, But Will Wait
Paraguay still has a long-term goal of tapping the international capital markets, but must first resolve a court case involving a defaulted loan and will also likely wait until the country achieves an investment-grade rating, government officials told LatinFinance at the sidelines of the IMF meetings. A Swiss court has ruled that the nation must pay debt holders interest and principal on an $80m loan extended to a Paraguayan diplomat in the 1980s during the dictatorship of Alfredo Stroessner. The government cannot tap the bond markets “until we resolve that,” the official said. Besides, he added, the country is in good fiscal shape and does not require the funds. Citigroup had been working with the government, but does not necessarily have the mandate for any upcoming issue, he said. The sovereign is still several notches below investment-grade, but was recently upgraded to BB- from B by S&P. This came on the back of increased fiscal flexibility thanks to the Brazilian government’s agreement to raise the country’s share of revenues generated from the Itaipu Dam. As a result, Paraguay’s revenues are expected to increase by 1.5% of GDP, allowing it to fund much needed-infrastructure. Earlier this year, BBVA Paraguay priced its $100m 3-year bond to yield 9.75% via Citi and BBVA, issuing what was thought to be one of the first cross-border dollar deals to emerge from the country. The Reg-S only transaction was rated Ba3.
Fibria Reaches Non-Core Sale Agreement
Fibria has agreed to sell $313m in non-core assets to Oji Paper, firming up a process started last month when Fibria entered into exclusive talks with the Japanese buyer. The deal includes the Piracicaba facility that produces heat-sensitive, self-copying and couche paper, and marks the last of Fibria’s non-core assets to go as part of a long-term deleveraging plan. “They wanted to be a one-product company making pulp, and that’s their major product line,” a US-based industry analyst explains. The asset sale also helps bring down the company’s high debt, the analyst said. The deal is expected to close September 29, subject to government approval. Goldman Sachs advised Fibria.
MILA Eyeing Mexico, Panama and Fixed-Income
Despite low volumes and a postponed Lima-Bogota Bolsa merger, exchange officials from the Mercado Integrado Latinamericano (MILA) markets see tie-ups with Mexico and Panama in the medium-term, as well as fixed-income cross-listing. “The two potential names are Mexico and Panama,” says Francis Stenning, CEO of the Bolsa de Valores de Lima. He notes Panama has shown the most interest. The next 5 years will be dedicated to improving the cross-listing platform and expanding to other countries, he adds. Thereafter MILA could focus on full exchange integration, and adding fixed-income cross-listings. There should also be room to develop additional products. “We would like to develop futures attached to MILA products,” says Maria Jose Ramirez, vp of the Bolsa de Valores de Colombia. Such products may not generate high volumes, but they should lure foreign investors, which is the true goal of the platform launched in March, Stenning says. Activity has been low so far, but it is hoped the Andean economies continue to remain isolated from global troubles and attract more outside funds. “Asia’s transformational growth story should continue,” even if events in Europe worsen, a particularly positive scenario for the Andean countries, says Jason Press, equity strategist at Citi. He notes a disconnect, in that global equities have priced in a global recession, while commodity prices are reflecting expectations of EM growth. Citi finds the latter to be the more accurate of the two scenarios. Peru, the highest beta among the three MILA markets, would see the most upswing, with Peruvian banks and mining companies such as Southern Copper particularly well-positioned. However, Peru would also be the most vulnerable to a double-dip. Stenning, Ramirez and Press spoke at a conference organized by Bloomberg Thursday in New York.