Colombia’s Banco de Occidente plans to sell domestic bonds Thursday, according to a banker managing the sale. The banker does not give the exact amount, though the issuance comes under a COP1trn ($545m) program and is likely to be in the range of COP300bn-400bn. The unit of Grupo Aval will be able to choose from 3-year bonds paying a fixed rate or a spread to the IBR rate, 5-year bonds paying a fixed rate or a spread to inflation, 7-year bonds paying a spread to inflation, and 10-year bonds paying a spread to inflation. Corficolombiana is managing the sale, rated AAA on a national scale.
Category: Regions
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Ford MXP Price Talk Heard
Price talk for Ford Credit de Mexico’s 18-month floating rate bonds is 180-200bp over TIIE, according to market participants. The auto finance services company plans to issue up to MXP1bn ($76m) through a bond issue tentatively scheduled for September 23. “The 180-200bp over TIIE represents a good premium for 18 month paper,” says an investor following the name. This will be Ford’s first bond transaction in the local bond markets since 2007. Actinver, HSBC, IXE, Scotia Capital are managing the transaction, rated A2 on a national scale.
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BBVA Colombia Sells Local Bond
BBVA Colombia has sold COP353bn ($192m) in domestic subordinated bonds, upsizing the transaction by COP53bn. A COP95bn 2018 tranche pays IPC+4.28%, a COP106bn 10-year tranche pays IPC+4.45%, and a COP152bn 15-year portion pays IPC+4.60%. BBVA led the deal, rated AAA on a national scale. Titularizadora Colombiana is set to follow Wednesday with a COP278bn RMBS offer, and Banco Occidente is expected Thursday.
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Mexico DCM Slowing Likely
Mexico’s domestic bond market could see issuance put on hold given continued market volatility, bankers say, with many waiting to see if a CFE transaction gets done today or tomorrow. “There is no clear sign but there is a possibility issuance may be delayed for another 2-3 weeks,” notes a Mexico-based banker. Last week, Pemex postponed issuance of up to MXP15bn ($1.14bn) in bonds because of poor market conditions. “Issuers may have the same mindset as Pemex,” notes a second banker. Mexican builder ICA and Mexican utility Comision Federal de Electricidad (CFE) both have plans to issue domestically this week, with CFE looking at a reopening its 2014 and 2020 bonds and Mexican builder ICA through two subsidiaries looking to issue up to MXP8.3bn ($632m) in asset backed bonds. “ICA and CFE are expected to issue to week but it has yet to be seen if it will happen,” notes a third banker. Mexico’s Banco Compartamos and Ford Credit de Mexico also have scheduled issuance for this week for up to MXP2bn and MXP1bn issuance respectively. Both issuances are floating rate bonds paying a spread over TIIE. “Everyone is waiting to see what will happen with CFE before deciding what to do next,” adds another banker. Bankers on the CFE deal expect pricing on Tuesday or Wednesday of this week. Mexican investors are keeping close tabs on US and European markets and are being selective. “There is tremendous risk aversion at the moment and we still remember Pemex and CFE bonds reaching 100bp over TIIE in 2008,” adds an investor.
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Marfrig Preps Sale of QSR Assets
The Martin-Brower Company is offering to pay $400m to acquire Brazilian food company Marfrig’s quick service restaurants (QSR), logistics assets and other business from its subsidiary Keystone Foods. By divesting these assets, Marfrig and Keystone hope to focus on their core protein businesses. The company says that it will keep its position in the recently announced joint venture with Cofco as it looks to develop its logistics business in China. “Our distribution business is world class,” Larry S. McWilliams, CEO of Keystone Foods, said in a statement. “However, we feel that by strategically focusing our resources on our proteins business, we will be able to add greater value to our customers in the QSR market.” The sale is still subject to regulatory approvals and due diligence.
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BBVA Set to Lead Week of COP FIG Issuance
BBVA Colombia is scheduled to sell COP300bn ($166m) in domestic subordinated bonds today, upsizeable to COP500bn. The bank is looking at a 7-year tranche paying IPC+4.3%, a 10-year paying IPC+4.6%, and a 15-year paying IPC+4.8%. BBVA is leading the deal, rated AAA on a national scale. Titularizadora Colombiana is set to follow Wednesday with a COP278bn RMBS offer, and Banco Occidente could also pull the trigger on a deal as soon as this week. Additionally, Helm Bank has approved a COP2trn 3-year shelf to issue additional debt.
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Low Mexican Rates to Lure Issuers
More foreign issuers are likely to try to tap the local Mexican markets in coming months given the attractiveness of the rate and swap environment, Ricardo Velazquez, managing director of the financial institutions group at Banorte-IXE, tells LatinFinance. “Rates are on the decline and the market has discounted some of that,” adds Velazquez. “We have never seen these kinds of rates and it is very stable.” This comes after recent MXP issues from several European banks as well as Chile’s Banco de Credito e Inversiones (BCI). Mexico’s interbank rate TIIE was being quoted at around 4.75% Friday, but according to Velazquez was recently as low as 4.60%. Since mid-August though, issuance has been slow, with Pemex recently putting off a domestic sale that could have reached MXP15bn ($1.16bn) in size. Others awaiting issuance include Ford Credit, Banco Compartamos and ICA, but bankers are able to give little indication of when the pipeline is likely to resume.
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Colombia Seeks to Facilitate Local TES Purchases
The Colombian government is seeking ways to facilitate foreign investment in its local treasury or TES market, German Arce, the country’s head of public credit, tells LatinFinance. At the moment, foreigners largely stick to Colombia’s Global TES market rather than expose themselves to the complexities and costs of investing locally. But the government is trying to change that. “How can we create conditions for foreign investors to buy local TES?” asks Arce. “We are going through the process of tax reform, in which we want to understand how we can provide a non-biased tax treatment. Today it is negatively biased for external investors.” The idea is to simplify local tax regulation and take away the uncertainties of investing in the local market. “[Regulation] is not unfriendly but complex. We are trying to simplify tax and financial regulations,” Arce adds. Tomorrow, Colombia is scheduled to offer holders of COP39trn ($21.5bn) in 5 series of domestic bonds the opportunity to exchange for 3 series of longer-dated bonds, including a new 2026.
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Occidente Launches Second Round for FO
Colombia’s Banco de Occidente has launched the order period for the second round of its COP200bn ($112m) sale 6.06m shares at COP33,000 each. Buyers came in for 5.49m shares in the first round, indicating the raising of COP183bn so far. The offer closes in 15 days. The bank’s own brokerage and Deceval are managing the sale. Retailer Grupo Exito is also in the Colombian market at the moment, scheduled to close its COP2.502trn ($1.40bn) equity follow-on Friday.
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Bladex Mandates, Awaits Window
Banco Latinoamericano de Comercio Exterior (Bladex) has mandated banks for an international bond offering and is considering tapping the markets soon if conditions are favorable, Christopher Schech, supranational bank’s CFOs tells LatinFinance. With 5 to 7-year bond funding, the supranational bank can better insulate itself against volatility and be ready to compete should markets close as they did in the wake of the Lehman debacle. Size would need to be in line with the market’s liquidity requirements, likely $150m-$200m. Schech declines to name the banks Bladex has hired. The bank has several funding sources, including deposits, and most recently it has tapped the syndicated loan markets in Asia, achieving 3-year tenors. With an EMTN program already established, the bank can issue in any currency, though it always swaps back to dollars. Apart from market volatility, the new dollar bond is complicated by the need to come in size to satisfy investors’ liquidity needs and then having to find a home for the proceeds in Bladex’s lending portfolio. “You would need to know where funding is going on a matched funding basis,” says Schech. Bladex is also considering a local market foray in Mexico, but timing very much depends on suitable windows in the swap market.