State-controlled Colombian oil giant Ecopetrol has issued COP1trn ($518m) in local bonds tight to guidance, according to a banker on the deal. Ecopetrol got demand for more than COP3trn, toward the low end of expectations. Bankers on the deal expected bids for 3x-4x times the amount offered. The AAA rated deal came in 4 tranches, all priced at par. A 5-year COP97.1bn piece pays 2.80% over IPC, a 7-year COP138.70bn 3.30% over IPC, a 10-year COP479.90bn 3.94% over IPC and a 30-year COP284.30bn piece pays 4.90% over IPC. A banker on the deal had previously estimated that the 5-year notes could price at IPC plus 3.0%-3.2%, the 7-year notes at around IPC plus 4.0%, the 10-year notes at around IPC plus 4.5% and the 30-year notes at IPC plus 5.0%. October IPC is 2.33%. A banker on the trade says local investors represented the majority of the book, with local pension funds and insurance companies opting for the 30-year notes. He notes some foreign interest, but is unable to specify the total purchased. The 30-year repriced Colombian public debt tighter, the banker adds. Other publicly controlled companies like power holding company Isagen and telecom UNE have outstanding bonds. Proceeds from the sale will go to finance the oil company’s capex plan, for which it has a budget of about $8.5bn. Correval and Valores Bancolombia led the sale.
Category: Regions
Strong Demand Expected for Ecopetrol Bonds
Colombian oil giant Ecopetrol is set to issue COP800bn ($417m) in local bonds today with the possibility of going up to COP1trn depending on demand. Local bankers on and off the deal say demand will likely surpass COP1trn. One banker on the deal says demand could reach 3x-4x times the maximum amount as Ecopetrol is favored by investors seeking to benefit from the popularity of the energy sector in Colombia. The issue will have tenors of 5, 7, 10 and 30 years at various spreads over the IPC benchmark, according to bankers. One banker estimates that the 5-year notes could price at IPC plus 3.0%-3.2%, the 7 year notes at around IPC plus 4.0%, the 10-year notes at around IPC plus 4.5% and the 30-year notes at IPC plus 5.0%. Proceeds will go to finance the Colombian oil giant’s capex plan, for which it has a budget of about $8.5bn. Correval and Valores Bancolombia are leading the sale of the AAA rated bonds.
Mexico’s Value to Issue Locally
Value Arrendedora, the Mexican leasing company, will sell MXP3bn 5-year bonds in a self-led deal December 22, according to the company. The bonds are rated A on a national scale. Proceeds will be used to replace outstanding bonds and to expand lending activities. The company says it will continue to monitor market conditions to determine pricing.
Inbursa Raises MXP5bn in Bonds
Mexico’s Banco Inbursa, a subsidiary of financial group Inbursa, issued up to MXP5bn in 2-year bonds on Tuesday. Inbursa, Banamex and HSBC were joint leads on the transaction, rated AAA on a national scale. The bonds will pay a spread of 13bp over TIIE, after the order book was 1.47x oversubscribed. Investors had expected pricing to be in the 25bp over TIIE area. Funds will be used to improve the bank’s liquidity profile and expand its credit portfolio. This will be the bank’s third issue this year. In October, it sold MXP5.0bn in 3-year bonds at TIIE plus 20.0bp on a book that was 1.7x oversubscribed, according to a banker at one of the leads. That transaction was through Inbursa and BBVA Bancomer and rated AAA on a national scale. Before that, Inbursa issued a MXP5bn 5-year bond at TIIE plus 24bp in August, its first since 1993.
Casino Pares Down Venezuela Exposure
French retailer Casino Group says it is selling an 80.1% stake in Venezuelan retailer Cativen to the Chavez government for $690m. The stake includes the 28.6% held by Colombian retailer Almacenes Exito, a subsidiary of Casino. Casino says it will retain a 19.9% participation in the company to continue providing operational support and develop cooperation with the new state-controlled entity. It adds that it will receive 60% of the total payment upon imminent closing, being 20% in cash and 40% in 2 USD denominated promissory notes of equal amount each and maturing in November 30 and November 30 2011, respectively. The remaining 40% will be paid in cash following a payment schedule that extends until February 2011. Celfin says it finds the deal positive as it could help Exito reduce volatility in the stock as it eliminates exposure to Venezuela and accelerates new store openings for 2011.
Mexico Leaves Rates Unchanged
The central bank of Mexico has kept rates unchanged at 4.50%, in line with market expectations, citing continued growth in industrial production and exports, although there has been some weakness on the demand front. Morgan Stanley believes the rate will stay at 4.50% until the end of the year. “We suspect the authorities would have to see further tightening in monetary conditions – via an appreciation of the exchange rate – before they consider altering their stance,” the shop says. Barclays, meanwhile, expects the rate to stay at 4.50% at least until Q311.
Atlixco-Jantetelco Upgraded by Fitch
Mexico’s Atlixco-Jantetelco toll road was upgraded to positive outlook from stable by Fitch. According to the ratings agency, it downgraded several transportation assets in the wake of the financial crisis. The outlook change represents Fitch’s first positive rating action since the crisis, it says, as economic stabilization is leading to improving trends in toll road performance. Fitch also says it expects growth from Atlixco-Jantetelco, which has proved resilient to the global crisis and performed well over the last several months. It also carries a closed debt structure that forces prepayment of debt with excess cashflow. Atlixco-Jantetelco registered a 2.3% decline in traffic in 2009, better than other Mexican toll roads. In the first 9 months of 2010, revenues in real terms increased by 16.1%, according to Fitch. The ratings agency says it believes debt amortization will occur at a faster rate than originally scheduled. Atlixco-Jantetelco is a 34.2 mile road, operated by Opervite.
Banco Occidente Misses Bond Target
Colombia’s Banco de Occidente planned to issue COP400bn ($218m) in local bonds, but ended up issuing only about COP360bn, with total demand of COP384bn. A banker away from the deal believes the smaller than expected demand is explained by the upcoming COP1trn Ecopetrol issue, which is expected to take place Wednesday. “The timing of Occidente’s issue was not the best, they should have waited until after Ecopetrol’s issue,” he adds. The AAA notes, which priced at par, were issued in 4 pieces. A 3-year piece has a coupon of 2.72% over IPC yielding 5.11%, a 5-year piece has a coupon of 3.15% over IPC yielding 5.55%, a 5-year piece has a coupon of 1.35% over DTF yielding 4.91% and a 3-year piece has a coupon of 1.42% over IBR yielding 4.48%. This is the first issue from a COP1trn shelf, a banker says. Occidente managed the sale itself.
Banamex Gets MXP7bn in 5-Year Money
Banamex on Wednesday issued an MXP7bn 5-year bond. The bank had been expected to issue a dual tranche 10-year and 5-year deal, but the bank decided to issue the full amount in 5-year bonds, due to levels of demand for that tenor. The bond priced at TIIE plus 28bp, 7bp tighter than the guidance. The bonds are rated AAA on a national scale and use of proceeds is to expand its lending portfolio. Private banks, investment funds, insurance companies and treasures participated in the deal.
Fonacot Lands 3-Year Paper
Instituto del Fondo Nacional para el Consumo de los Trabajadores (Fonacot), issued MXP2.5bn in 3-year bonds Wednesday, tight to guidance. The deal was 1.6x oversubscribed, and priced at 39bp over TIIE, according to a banker on the deal, tight to guidance of 40bp-45bp over TIIE. Private banks, insurance companies, mutual funds and bank treasuries participated in the deal. Proceeds will be used to expand Fonacot’s consumer loan portfolio. The bonds are rated AAA on a national scale. Bancomer and Scotia were bookrunners.