Railroad operator Kansas City Southern de Mexico has received acceptance from holders of $139m of its outstanding 2013 bonds and $31.6m of its 2016s, it says, as of the November 16 early deadline of a tender offer. KCSM had offered holders of the $175m outstanding 7.625% 2013s $1,040.63 per $1,000.00 principal before the November 16 early deadline and $1,010.63 after. Holders of the $150m in outstanding 12.500% 2016s were to receive $1,240.00 per $1,000.00 principal prior to November 16, and $1,210.00 after. The offer expires December 1. Bank of America Merrill Lynch is managing. KCSM has said it plans an unspecified “debt transaction” to fund the offer. Kansas City Southern is rated B1/BB.
Category: Regions
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Colombia Rates Seen Steady
Colombia’s central bank is widely expected to keep its monetary policy rate on hold at 3.00%. Morgan Stanley, for instance, says the bank will keep rates unchanged as inflation remains benign. It adds that the rate should stay at this level for the rest of the year, but it expects it to tighten to 6.00% by the end of 2011. Local brokerage Corredores Asociados believes it is necessary to keep the rate around 3.00% at this level to jumpstart economic activity amidst low inflation.
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Alfa Commitments Due 7 December
Mexican conglomerate Alfa will close syndication for its $600m 3-year bullet facility on 7 December, and signing is expected by 15 December, according to bankers with knowledge of the transaction. It is heard to be offering a spread of 300bp over Libor on a leveraged grid for its syndicated loan to back the $600m purchase of Eastman Chemical assets in the US. A banker away from the transaction described the spread as being attractive to lender. The bank meeting on Tuesday in New York was well attended by banks from Europe and Asia, as well as from the US, according to a banker away from the deal. The bank meeting in Mexico will take place today. Credit Suisse and HSBC are the leads. Alfa’s purchase of Eastman’s polyethylene terephthalate resins business and related assets and technology of its Performance Polymers segment was done by Alfa unit DAK Americas. BAML advised Eastman while HSBC worked on the buyside. Fitch downgraded Alfa subsidiary Grupo Petrotemex to BB (stable) from BB+, including notes issued by DAK, amid fears over leverage incurred in the purchase. On a pro-forma basis, Fitch estimates that Petrotemex’s total debt-to-Ebitda, including 12 months of Eastman assets operations, could reach 3.3x in 2010 before gradually decreasing. This compares negatively with a total debt-to-Ebitda ratio of 2.2x for the 12 months to June 30, and falls outside Fitch’s prior leverage estimate of 2.0x-2.5x. Nonetheless, Fitch notes that the investment is strategic and positive for Petrotemex, and should strengthen its business as it gains PET market share in North America.
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Mexican Pipeline Refills
Ally Credit, Fonacot and Grupo Kuo are expect to issue in the Mexican domestic market next week. Ally Credit, the auto financing company, is expected to issue a MXP1bn 1.5 year bond on 23 November at a spread of TIIE plus 150bp via Ixe and Scotia, says a banker at 1 of the leads. The bonds are rated AAA on a national scale. The use of proceeds is for automotive loans. The following day Instituto del Fondo Nacional para el Consumo de los Trabajadores (Fonacot), will issue up to MXP2.5bn in 3 year bonds. Bancomer and Scotia are bookrunners. The guidance is 40-45bp over TIIE, according to a banker at 1 of the leads. The use of proceeds is o expand its consumer loans. The bonds are rated AAA on a national scale. Grupo KUO is looking to issue MXP700m of 5 year bonds in on 25 November. Guidance is heard at between 260bp and 270bp over TIIE. The bonds have a BBB + rating on a national scale, which 1 investor says is tight, given the company’s rating. IXE is the bookrunner on the deal. Proceeds will be used to refinance liabilities and for other corporate purposes. KUO has holdings in the consumer goods, chemical and automotive industries.
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CFE Delays Bond Issue
CFE has delayed its MXP10bn 4-year floating and 10-year fixed rate bond until 1 December, according to a banker on the deal. Banamex, BBVA Bancomer and ING are bookrunners on the deal. The bonds are rated AAA on a national scale. The transaction had been planned for mid November, but the issuer decided to delay the offer to await a less crowded market, adds the banker. The transaction is the first in a new program. Investors still expect the Mexican electricity authority to price at 30bp over TIIE for the 4-year and 120bp-130bp over Mbonos for the fixed tranche. The use of proceeds is for general financing purposes. It is also issuing a MXP450m 2 years 8 months bond, in a re-opening of a previous bond issue, as part of previous shelf. The bond will be issued via Ixe and Banamex. The bonds are rated AAA on a national scale.
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EBX Targets Colombia Mine
Brazilian conglomerate EBX is offering to acquire Canada-based miner Ventana Gold for about CAD1.50bn or CAD12.63 per share, a 25.92% premium to its CAD10.03 close on Tuesday. EBX already holds a 20% stake in Ventana, which owns the La Bodega project in Colombia. The mine is expected to produce an annual average of 301,000 ounces of gold in the first 6 years of full production. Ventana estimates that the project will require investments of about $71m for the life of the mine and further development investments of approximately $98m. EBX does not say if it has hired financial advisors and Ventana says it is in the process of hiring banks to review the offer. Ventana’s shares closed at CAD13.90, up 39%.
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Tariffs Hinder India/LatAm Investment
Tariffs between LatAm and India are hindering trade, according to a study by the IDB. India represents only 1% of the region’s overall trade, compared to 10% with China. Reducing tariffs on Indian imports by just 10% would likely increase imports of Indian goods into Chile and Argentina by as much as 36%, the IDB says. India’s average tariff on LatAm agricultural goods is 65%, more than 5 times China’s 12.5% tariff, says the IDB. Even though Latin American tariffs on Indian goods are not as high – reaching 9.8% in the case of manufactured products – they are well above the 4% to 6% OECD range, the study said. A 10% reduction in average tariffs (i.e., reducing a 6% tariff on a good by 0.6%) imposed on Indian products, for example, would likely increase imports of Indian goods by 36% in Chile and Argentina. Cutting transportation costs will also boost trade. A 10% reduction in shipping costs would likely increase trade between Chile and Argentina by 46% and 47%, respectively, according to the IDB. High trade costs are also preventing LatAm from reaping full benefits from its current trade with India and undermining the flow of investments between the 2 regions. Today a 1% growth in China’s gross domestic product generates a 2.4% increase in this region’s exports to China. Meanwhile, a 1% rise in India’s GDP yields just a 1.3% growth in the region’s sales to the country. The study also finds that India could be a significant competitor with LatAm countries. In terms of low-technology goods, India has been boosting exports of textiles and apparel. It has now 3% of the U.S. market for these goods, which is twice that of Brazil’s (1.5%), higher than Central America’s (2.4%), and fast approaching Mexico’s dwindling share (7%).
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Occidente Bond Expected Next Year
Colombia’s Banco de Occidente is expected to issue the first bonds from a COP1trn ($555m) shelf registration in early 2011, say bankers not on the deal. “It is possible that Ecopetrol will issue its bonds before the end of the year, so it is likely that Banco de Occidente will wait until early next year to do its own in order to make sure there is enough liquidity in the market,” says one of the bankers. Ecopetrol is planning to raise COP1trn via a local bond sale. The Occidente notes will be either ordinary, subordinated, or a combination of both, according to 1 of the bankers. The ordinary bonds, which are rated AAA, would have a tenor of 3-5 years and the subordinated bonds, rated AA+, would have a tenor of 7 years. Both kinds would have tranches pegged to the IPC, IBR, and DTF benchmarks or have fixed coupons. Occidente has not chosen a lead. In October, Colombia’s Helm Bank issued COP400bn ($218m) in AA+ rated local bonds in 4 tranches that priced a 3-year piece at IBR plus 1.64% to yield 4.75%, a 3-year piece at IPC plus 3.00% to yield 5.35%, a 5-year piece at IPC plus 3.50% to yield 5.86% and a 7-year piece at IPC plus 4.12% to yield 6.49%. In June, Colombia’s Banco Popular issued COP300bn ($152m) in AAA rated local bonds which priced an 18-month piece at 0.95% over DTF, an 24-month tranche at 1.10% over DTF, a 24-month piece at 2.90% over IPC, a 36-month piece at 3.23% over IPC, an 18-month tranche at 1.20% over IBR and an 18-month tranche at a fixed rate of 4.98%.
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Compartamos Holdco to List
Publicly listed Mexican micro lender Banco Compartamos plans to have its holding company, Compartamos SAB, list on the Mexican stock exchange. The move would simplify the bank’s corporate structure, which would consist of a single publicly listed company rather than a privately held holding company with a majority stake in a publicly listed operating company. The change in structure will be achieved through an exchange offer whereby shareholders in the operating company will receive 4 shares in the holding company for every share they own. In order for the offer to take effect, the holding company must receive at least 85% of the shares in the operating company. If more than 95% of the operating company’s shares are tendered, it will delist. The offer expires December 13. The bank’s management will not change, Compartamos says, adding that the deal will not result in any cash proceeds either for the bank or the holding company.
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Ultrabursatiles Plans Colombia PE Fund
Colombia-based brokerage Ultrabursatiles is launching a private equity unit, Ultracapital. Its first fund will acquire and lease commercial real estate, CEO Susana Gomez tells LatinFinance. “We expect to raise COP200bn ($109m) and to have a first closing in February,” Gomez says. Ultrabursatiles will begin marketing the fund this month and will approach local and foreign institutional investors, she says. A portion of proceeds from the leases will go to repay investors. Gomez, who expects returns of about 9% per year, says that the fund will invest in Colombia’s largest cities.