Brazil’s government-backed utility Eletrobras plans to bid for the Portuguese government’s 25% stake in national utility Energias de Portugal (EDP). The company is still waiting for the terms of the bidding process, according to public remarks by CFO Armando Casado. Most important is the issue of it gaining a seat on EDP’s board. Portugal is planning to sell a 25% stake in EDP, which has electricity assets in Brazil, as part of a EUR78bn bailout agreement reached with the European Union and the International Monetary Fund. Eletrobras had been thought to be a contender, along with Europeans including EDF and Iberdrola. Eletrobras is planning to seek financing for the buy, Casado is reported as saying. Eletrobras has mandated Credit Suisse and Santander for a $1bn-$2bn bond sale, likely a 10-year, and expected this month.
Category: Regions
Panama Politics Challenge Growth Story
Despite strong economic performance Panama could continue to underperform due to political troubles, analysts say. This was highlighted by the row that may see the departure of Finance Minister Alberto Vallarino. Vallarino and other cabinet members have threatened to quit over the firing of the country’s foreign minister. Juan Carlos Varela, who also holds the position of vice president, was fired as foreign minister after the President accused him of dedicating too much time to his plan to run for president in 2014. Vallarino, Varela, and the others who threatened to quit are from the Panamenista party, a junior coalition partner with the President’s party. “With the latest political news, we think Panama is likely to continue underperforming its high grade peers,” Nomura says, noting it had been expecting a convergence to neutral. Citi, however, says these political events should not have a significant short-term effect on asset prices.
AMX Moves Ahead of September Rush
Mexico’s America Movil (AMX) emerged Wednesday with a $2bn 5-year bond and a $750m retap of its 2040s a week ahead of an anticipated September rush. The $2bn 2016 bonds priced at 99.188 with a 2.375% coupon to yield 2.549% or UST+158bp, locking in what leads described as the second lowest coupon ever achieved by a telecommunications company. AMX’s 6.125% 2040 retap priced at 108.916 giving investors a 5.502% yield or UST+190bp. The 2016s and the 2040s were trading at T+155bp and T+184bp in the grey late Wednesday. The new 5-year was seen coming with a 20bp new issue premium and was compared against AT&T and Verizon’s 2016s, which were trading at UST+125bp and UST+120bp, respectively. Starting with UST+170bp whispers and then tightening guidance to 160bp-165bp over, leads Bank of America Merrill Lynch and JP Morgan were able to build an impressive $6.25bn for the 5-year and print with a $2bn size. “AMX’s bonds were cheaply priced,” notes a participating portfolio manager. “AMX is a cash machine, has good ratings and priced at levels to get the deal done today,” Proceeds will be used to finance capex and part of AMX’s up to MXP76.34bn ($6.12bn) buyback of Telmex. Leads closed the book early Wednesday to the tune of $6.25bn for the 5-year, while demand reached just shy of $2bn for the reopening. “EM inflows have been very strong which means people have a lot of cash to put to work,” notes another investor. AMX is rated A/A minus/A2.
Mexichem Closes Club
Mexichem has raised $1bn through a 3-year revolver in what is essentially club-style transaction involving 9 banks. Proceeds will be used to pay down short-term liabilities and provide the company with sufficient resources for any possible acquisition opportunities that may arise. Apart from the 6 original, Bank of Tokyo, Mizuho and Sumitomo joined later to participate at junior levels. This comes after much talk that the chemical company has been on the hunt for acquisition targets in the chlorine, fluorine and high-end plastic sectors. Pricing for the BBB minus credit is tied to a ratings grid offering L+90bp out of the box for utilization of less than 33%, 95bp for utilization of between 33%-67% and 100bp for over 67%. Spreads tighten or widen by 20bp for each ratings notch above or below BBB minus. Leads were Bank of America, BBVA, Citi, HSBC, JPMorgan and Santander.
Belize pulls the plug
FDI-starved Belize would normally welcome a surge in investor interest, but the tiny nation is grabbing attention for all the wrong reasons.
Turning the Corner
The Dominican Republic is on a path to recovery as FDI flows increase and more investors buy its debt in the local and international bond markets. Will politics ruin the party?
Après Moi…
Venezuela’s presidential elections are still more than a year away. But the possibility of regime change is already moving spreads. Are investors blind to the underlying risks?
Latin Lifeline
Faced by slow growth at home, Spanish and Portuguese companies want to hold on to valuable LatAm assets. But in times of distress these are also the easiest to sell.
Catching Up
LatAm infrastructure spending is lagging behind emerging market peers. Private sector investments may take up the slack, but are governments doing enough?
Upside Potential
Venezuela’s presidential elections are still more than a year away. But the possibility of regime change is already moving spreads. Are investors blind to the underlying risks?