The Bank of Jamaica cut its monetary policy rate by 50bp to 7.50% in response to lower inflation. JPMorgan expects annual inflation to moderate from 13.2% in September to 10.0% by year-end due to still weak domestic demand and a stable Jamaican dollar. It also says double-digit inflation and upside risks stemming from the recent surge in global food prices will limit the central bank’s ability to cut interest rates further. Including Friday’s rate cut, the central bank has cut rates by a total of 300bp since February.
Category: Regions
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Nestle Ecuador Launches ABS
Nestle’s Ecuador unit has launched the sale of 3-year and 5-year portions of a $74m domestic bond offer, with a 7-year due next week. “This is a good time to access the market,” Santiago Noboa, Nestle Ecuador CFO, tells LatinFinance. He adds that there is liquidity available from the government pension funds and other local investors. A $20m 3-year 7.25% coupon tranche and a $15m 5-year 7.75% tranche launched Friday, and a $35m 7-year 8.25% piece featuring a 1-year grace period, and a $4m 7-year subordinated slice paying 8.75% will launch at some point next week, he adds. The sale should wrap up in the next 2 weeks, he says. Noboa says the company will aim to sell the bonds at slight premia. The deal is guaranteed by Nestle’s future sales in Ecuador and follows a $70m ABS in 2008. Produbanco is managing the trade, rated AAA.
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Ecopetrol Picks Pipe Partners
Ecopetrol has picked equity partners to join a consortium to build the $4.2bn Oleoducto Bicentenario oil pipeline, it says. Ecopetrol will contribute 55% of the equity portion of the project, with the remaining 45% ($139.5m) equity participation coming from the partners. Pacific Rubiales (32.9%) and Petrominerales (9.7%) are taking the largest positions. Hocol, Rancho Hermoso-Canacol, Grupo C&C and Vetra each took stakes of less than 1%. The partners should also contribute $700m to fund construction of the project’s first phase, Ecopetrol says. The project will also require an undetermined debt component, of which Ecopetrol has said it would seek a portion in Colombia’s domestic markets.
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CAF Goes Back to Euros
CAF is set to meet European investors today and tomorrow, with the aim of issuing a euro-denominated bond. No terms have been announced, investors say, noting that BNP and HSBC are managing the process. The Andean multilateral lender sold EUR100m in 2015 floating-rate bonds in February through Goldman Sachs, according to Dealogic, its first euro-denominated deal since a EUR300m 2006 offer.
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Thai Company Buys Invista
Koch Industries has sold its Invista unit to Thailand-based Indorama Ventures for $420m. Among the assets sold to the PET manufacturer is Grupo Arteva, a collection of Mexican assets located in Queretaro. Indorama financed the deal with cash on hand and bank financing, and the price includes working capital and the assumption of debt. Arteva has production capacity of 535,000 tons of PET, polymers and fibers per year. The transaction is expected to close during Q1 2011. Deutsche advised the buyer. Indorama could not be reached for comment.
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Stefanini Targets US Buy
Brazil’s Stefanini IT Solutions has launched a tender offer for all outstanding shares of common stock in TechTeam. Stefanini made an $8.35 per share tender offer, net of cash, for the US IT outsourcing and BPO company. The per share offer implies an aggregate deal value of $93.44m. TechTeam does not return calls for comment. The Brazilian IT solutions provider’s offer will expire December 10.
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Puny Salvador Fee Repels Banks
Bargain basement fees on El Salvador’s upcoming dollar bond issue have driven away potential bookrunners, leaving Deutsche as sole lead, according to DCM bankers familiar with the process. Deutsche is heard having accepted just 1bp to win the mandate. The issuer wanted additional leads at the same price, but other banks refused. “No other house would do it jointly for those fees,” says a banker close to the process. The Central American sovereign has a history of awarding bond deals for very little commission. It typically saves thousands of dollars in fees only to lose multiples of that in cheap pricing. Deutsche has had a good run in the LatAm debt league tables this year, so it appears not to be making a desperate bid for volume credit. However, it is understood to be keen to start a relationship with El Salvador, which is heard considering a $700m 10-year. Bankers say El Salvador is not leading a general trend of lower DCM fees, and that frequent sovereign issuers will still pay. “There have been a few tightly bid contests this year, but it’s not a widespread trend,” says a banker who pitched El Salvador. He adds that banks can still count on 25bp-35bp from a typical low investment grade frequent issuer in the region on a 10-year plain vanilla deal. Average fee per transaction is up sharply in 2010, according to Dealogic. Total LatAm DCM revenue was $243.00m for the year to October 15, on $84.13bn volume from 153 transactions. This compares to $244.00m for the corresponding period of 2009, coming from $66.11bn volume from 287 transactions.
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Actis Purchases Brazil’s Gtex
Actis has acquired Brazilian cleaning products company Gtex for BRL90m ($53m). The UK-based PE firm is acquiring the company through its $2.9bn fund, Actis Emerging Markets 3. Gtex owns a portfolio of cleaning products, with a presence in segments including laundry soap, fabric softeners, disinfectants, bar soaps, multi-use cleaners and steel wool. This is Actis’ second investment in Brazil in the past 2 months. In September, it invested $58m in supermarket chain Cia. Sulamericana de Distribucao. Actis has $4.8bn in AUM.
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Nicaragua Wind Project Signs Loan
The Amayo II wind project has closed on a $45m 15-year non-recourse project financing from FMO and Cabei. The facility consists of a $42m senior loan and a $3m mezzanine loan. Senior loan participants include Cabei, FMO, EKF and BIO. The borrower is Consorcio Eolico Amayo (Fase II), a subsidiary of AEI, Centrans Energy Services and Energia Eolica de Nicaragua. The wind project consists of 11 wind turbines capable of producing 23.1 MW of electricity. Output is fully contracted under long-term, 15-year PPAs with local power distribution companies Dissur and Disnorte.
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Anglo American Sells Chile Assets
Anglo American is selling its Chilean Moly-Cop business to Australia’s OneSteel. The subsidiary manufactures grinding equipment, and has facilities in Chile, Peru, Mexico and Canada. The business is being sold alongside Anglo American’s Canada-based AltaSteel unit for a total of $932m. The 2 units had combined revenues of $642m in 2009 with Ebitda of $72m.