Vitro has filed for the concurso mercantil bankruptcy process in Mexico and plans to begin Chapter 15 proceedings in the US and seek creditor protection for its US units. The company said Monday it would have to delay payments of $44m to bondholders who accepted a cash portion in Vitro’s $1.2bn restructuring offer, after a bondholder group claiming to represent $650m in Vitro debt and which opposes the offer filed to block it. A bond-for-bond portion of the restructuring offer closes December 21. Rothschild is Vitro’s financial advisor in the process.
Category: Regions
Posted inDaily Brief
EPM Raises COP500bn Locally
Colombian utility Empresas Publicas de Medellin (EPM) has issued COP500bn ($264m) in local bonds in 3 tranches, all priced at par. A 6-year tranche has a coupon of 3.25% over IPC, a 12-year piece pays 4.20% over IPC and a 20-year tranche pays 4.94% over IPC. Demand for the AAA rated notes, which will finance working capital, was almost COP976bn, says a banker on the deal. It was upsized from COP350bn. There was no bank leading the sale, but Correval, Interbolsa and Corredores Asociados were bookrunners. The closest comp is state-controlled Colombian oil giant Ecopetrol, which at the start of December issued COP1trn ($518m) in local bonds tight to guidance. A 5-year COP97.1bn piece paid 2.80% over IPC, a COP138.70bn 7-year landed at 3.30% over IPC, a COP479.90bn 10-year was 3.94% over IPC and a COP284.30bn 30-year pays 4.90% over IPC.
Posted inDaily Brief
KCSM Raises Tender Funds
Kansas City Southern de Mexico has sold $185m in new 2020 bonds, to fund a buyback of more expensive 2013 and 2016 bonds. The Mexican unit of the US railroad operator priced at par with a 6.625% coupon, to yield UST plus 323bp, and at the tight end of 6.625%-6.750% price talk given at announcement Tuesday morning. B1/BB KCSM will use proceeds fund the buyback, done through an offer to bondholders closing Friday. Holders of $142m in principal of the $175m outstanding in 7.625% 2013s and of $32m of the $150m outstanding in 12.500% 2016s had accepted as of December 1. KCSM had offered holders of the 2013 bonds $1,040.63 per $1,000.00 principal before the November 16 early deadline and $1,010.63 after. Holders of the 2016 bonds were to receive $1,240.00 per $1,000.00 principal prior to November 16, and $1,210.00 after. Bank of America Merrill Lynch is managing the tender, and was joined by JPMorgan to manage the sale of the new bond.
Posted inDaily Brief
Mexico Expands IMF FCL Access
Mexico is replacing a $47bn 1-year precautionary flexible credit line (FCL) arrangement from the IMF with a $73bn 2-year line, according to the fund. The sovereign is not expected to draw on the line, which is cheap insurance that should boost the MXP, says Goldman Sachs. “If the country ends up drawing funds the current effective interest rate under the FCL ranges between 2.1%-2.7% for access between 500% and 1,000% of quota [$32.5bn-$47bn], rising to about 3.4% after three years of use (plus a 50bp flat service charge),” it adds. “Longer duration and higher access available under the reformed FCL can play an important role in continuing to support Mexico’s policy strategy and in maintaining external confidence,” says IMF MD Dominique Strauss-Kahn. He adds that Mexico has strong policy frameworks, including inflation targeting, a flexible exchange rate regime and a balanced budget rule. “While Mexico was significantly affected by the global financial crisis, the authorities responded resolutely and effectively, and a recovery is now underway,” says the official. The FCL was established on March 2009 for countries with very strong fundamentals, policies, and track records of policy implementation. In August, it was amended to allow a 2-year deal at a higher amount. The repayment period is 3-5 years. Mexico’s first FCL was approved in April 2009 and renewed in March. Poland and Colombia have also established precautionary arrangements under the FCL.
Posted inDaily Brief
Sovereigns Plan More Global-Local
LatAm sovereigns are set to place more global bonds denominated in pesos and reais next year, on the back of well-bid 2010 transactions. “We . . . will use the same strategy that we used in the dollar curve to create benchmarks, using new issues and buybacks,” Brazil’s public credit directory Paulo Valle, tells LatinFinance. He notes Brazil will look to do new benchmark issuance next year, possibly at the 10-year point on the curve, after a successful BRL1bn 2028 retap in October. Valle says Brazil never abandoned the strategy of developing the offshore BRL curve, but the success of the local onshore market diminished its importance. A 6% IOF has helped stimulate investor interest in global BRL, Valle says, though there have still been strong onshore flows. “Incentives for investors to participate should be there for a while even if interest rates [in the US] go up or the global environment changes,” Miguel Angel Gomez, adviser of external financing at Colombia’s public credit department, tells LatinFinance. He adds that Colombia will look to sell more global TES in 2011, after offering some $1.3bn equivalent in global 2021 through 2 sales. A weak dollar and interest rate differentials versus the US have driven investors to local-currency this year, though optimists insist more structural phenomena are also at work. “We are seeing a significant shift,” says David Oliver, portfolio manager at Stone Harbor, which manages $7 billion in EM local currency assets. “It’s a significant trend that has grown with accelerating pace in the last seven years, and it’s hitting a crescendo with interest rates so low,” he adds. Mexico will also look to draw investors into liquid peso benchmarks, though in its case this means more syndicated sales of its Euroclearable domestic bonds. “We plan to continue using syndication next year,” says Mexico’s deputy undersecretary for public credit Gerardo Rodriguez. Hacienda, which offered $60bn equivalent at 5, 10 and 30-year maturities during
Posted inDaily Brief
IDB Lands Debut Paraguay A/B Loan
Banco Continental has signed a $40m syndicated A/B loan via the IDB, which will go towards increasing lending to small and mid-sized businesses. The A loan, from the IDB, is for $25m and is for 5 years, with a 2 year grace period. The B loan is divided into 2 tranches. The first tranche is a $5m 3-year bullet funded by Dexia Micro-Credit Fund, managed by BlueOrchard. The second tranche is for $10m, with a 5-year maturity and 2-year grace period. Participants were responsAbility SICAV (Lux) Mikrofinanz-Fonds and responsAbility SICAV (Lux) Microfinance Leaders, managed by responsAbility Social Investments. It is the first loan in Paraguay to be syndicated by the IDB. “We expect to see more transactions to fund financial institutions committed to providing financing in a way that is relevant to development and financially sustainable,” Daniela Carrera-Marquis, head of the IDB’s financial markets division, tells LatinFinance. “Investors are becoming more interested in transactions that are financially viable, but also contribute to sustainability,” she adds.
Posted inDaily Brief
Cemex Meets the Buyside
Cemex is set to wrap up today a US and European “non-deal” roadshow. The tour, to update investors following is most recent numbers and the reworking of bond covenants in October, is being managed by Bank of America Merrill Lynch and JPMorgan. Both bankers managing the process and investors see a debt transaction as a possibility next year, as the cement maker continues to manage its liabilities, and meetings now would allow for more flexibility to quickly hit a window next year. This year, it bought back MXP2.6bn in local bonds in June and in May swapped 4 series of dollar and euro perpetuals for $1.07bn in new 2020 dollar bonds and EUR115m of new Euro-denominated 2017s. Cemex is also obliged under its debt covenants to issue $1bn in equity of equity-linked securities by the end of 2011. Cemex convinced holders to reset coverage ratio and leverage ratio targets in October, following the announcement of its fourth straight quarterly loss.
Posted inDaily Brief
EPM to Issue COP350bn in Bonds
Colombian utility Empresas Publicas de Medellin (EPM) is set to price today a COP350bn bond issue from an up to COP500bn tranche of a COP2trn local program. It will sell 2016, 2022 and 2030 notes, all paying a spread over IPC. The notes are rated AAA by Fitch with Correval, Interbolsa and Corredores Asociados as the leads. The closest comp is state-controlled Colombian oil giant Ecopetrol, which at the start of December issued COP1trn ($518m) in local bonds tight to guidance. A 5-year COP97.1bn piece paid 2.80% over IPC, a COP138.70bn 7-year landed at 3.30% over IPC, a COP479.90bn 10-year was 3.94% over IPC and a COP284.30bn 30-year pays 4.90% over IPC. All came tight to expectations.
Posted inDaily Brief
CFE Prices Tight MXP Bonds
CFE on Monday issued MXP450m of August 2013 bonds 15bp tight to guidance, according to a banker at sole bookrunner Ixe. The deal generated demand of 1.5x the amount sold and priced 20bp over TIIE, versus guidance of TIIE plus 35bp, says the banker. The bonds are rated AAA on a national scale and participation came mainly from mutual funds and bank treasuries. Proceeds will be used for general corporate purposes and the amount is what remained of a previous shelf. CFE issued MXP14bn in a dual-tranche, 4-year floating and 10-year fixed rate bond at the start of December. The 4-year bonds priced at 26bp over TIIE, while the 10-years were priced to yield 7.96%, or Mbonos plus 120bp.
Posted inDaily Brief
Correction: Fitch Chops Javer to B Minus
A December 13 Daily Brief entitled “Fitch Chops Javer to B Minus” incorrectly states the nature of the move. Fitch downgraded the firm’s issuer default rating to B (stable) from B+ and it also cut $210m in senior unsecured notes to B+ from BB minus.