Peru’s BBVA Continental has raised less than expected from a $300m bond sale during a challenging day full of bad headlines about European sovereign debt and Brazilian banking concerns. Continental sold $300m of the new 2020s, after communicating a “benchmark” size the day before, on the back of more than $700m in demand, according to bankers on it. The BBB/BBB minus 2020 priced at 99.220 with a 5.500% coupon to yield 5.603%, or UST plus 300.0bp, the wide end of 287.5bp area guidance. Investors say it was impacted by worries about sovereign in Portugal and Ireland, as well as news of Brazilian Banco Panamericano’s emergency funding injection. Credit Suisse and Deutsche Bank managed the sale. The bank is raising funds for general corporate purposes.
Category: Regions
Bimbo Leverage Rises With Sarah Lee
Grupo Bimbo, the Mexican food company, was placed on negative watch by S&P after its announced $959m acquisition of Sara Lee’s North American bakery division and plans to raise debt to finance the deal. Bimbo is rated BBB on a global scale and mxAAA on a national scale. Moody’s is also changing its outlook on Bimbo from positive to on review for possible downgrade. S&P says that if the company’s ratings were downgraded, they would likely be limited to a single-notch move. Debt-to-Ebitda levels are expected to rise to 3.0x, from its current level of 2.4x. Prior to the acquisition, S&P had expected Bimbo to generate an operating income-to-debt ratio of 34% at the end of 2011, and is now revising its pro-forma forecast to 23%. Moody’s will review Bimbo’s plans to increase margins at the acquired business while extracting synergies. The acquired unit currently generates $108m in adjusted Ebitda on $2bn in revenues. Moody’s has Bimbo at Baa2 on a global scale and Aa1.mx for the local scale. A Deutsche research report says that Bimbo management estimates it needs to raise an additional $700m in addition to its existing long-term credit facilities to fund the transaction, but that this number will likely fall to $500m over the 7-8 months needed to finalize the deal, with the difference being funded by Bimbo’s cash generation.
Brazil Oil IPO Pushed Back
Karoon Gas Australia has pushed back the IPO of its Brazilian unit a week, to November 18 from November 10, the company says. Karoon’s Australian shares were placed on trading halt on Wednesday as it awaited results from a well being drilled by Petrobras, its partner in a Brazilian JV. Bankers on the deal say the company wants to list the Karoon Petroleo e Gas unit after the well results are announced. The deal would raise BRL1.18bn if priced at its BRL1,150 midpoint. Karoon is set to offer 1.03m primary shares, a 31.90% stake, in a range of BRL1,025-BRL1,275. A 15% greenshoe is also available. Karoon plans to use the proceeds to drill in 5 Peruvian and 7 Brazilian blocks. It claims to have a combined unrisked mean estimate of 2.15bn barrels of reserves for both countries. Morgan Stanley is lead coordinator of the deal, with BTG and Credit Suisse as bookrunners.
Goldman Expects Peru to Maintain Rate
Goldman Sachs expects Peru’s central bank to maintain its policy rate at 3.0% today, in line with market consensus. Goldman says in a report that consumer prices fell 0.14% in October, the second month in a row Peru experienced negative inflation. Goldman sees the 3.0% rate as stimulative, but not exceptionally so. Lacking inflationary pressure, the central bank will remain comfortable at this level for sometime, Goldman says, with a hike not coming until the first quarter of 2011.
Daimler Mexico Sees Short End Bid
Daimler Mexico has issued MXP750.0m in 2-year bonds, after receiving MXP7.6bn in orders, according to a lead banker. “This shows the deep liquidity in the 2 year part of the curve,” he says. The bonds priced at 45bp over TIIE (4.88%), the tight end of the (45bp-55bp) guidance. Bancomer and Banamex led the transaction. Investors included investment funds, private banks and insurance companies. The bonds are rated AAA on a national scale. Proceeds will be used for working capital.
Investors Pounce on Peru Dual Currency
Peru has sold $2.5bn-equivalent in bonds, offering yield-hungry investors a crack at a liquid part of its PES curve. The sovereign raised $1.0bn in new 2050s and $1.5bn equivalent in retapped sol-denominated 2020s, with investors placing $5bn in orders, according to a banker on the deal. The Baa3/BBB+/BBB global 7.84% of 2020 reopened at 114.718, to yield 5.750%, at the tight end of 5.875% guidance. “There are 2 spots on the local yield curve that offer strong liquidity, and the 2020 is one of them,” Roberto Sanchez-Dahl, a debt portfolio manager at Federated Investors, which manages $1.1bn in EM fixed income, tells LatinFinance. He says there is some pickup in the retap, with the 2020s trading to yield 5.40%-5.50% prior to the announcement. The Baa3/BBB minus new 2050 priced at 96.164 to yield 5.875%, in line with 5.875% area guidance. This also offers a pickup to the outstanding 2037s, the closest comp on Peru’s curve, which traded at 5.15%-5.20% at Tuesday’s announcement, according to investors, who note the comparison is tricky given the 13-year difference. The dollar bond was heard up a point Wednesday afternoon, according to traders. “The PES is one currency in the region that is super stable,” says a participating New York EM investor. He adds that the PES bond also offers about 80bp in pickup to the comp from Colombia. Bank of America Merrill Lynch and Morgan Stanley managed the sale. Peru follows Brazil, Chile and Colombia in issuing global local currency bonds this year, as historically low interest rates in developed economies and poor performance of hard currencies has led investors to seek higher yields in local currency. Brazil has communicated its intention to return to global BRL issuance in the next few months, and Colombia is rumored to be bringing another global TES.
EDC to Issue MXP CP
Canada’s Export Development Bank (EDC) will be launching a commercial paper program in Mexico for MXP3bn over 2 years beginning in 2011, says a spokeswoman for the issuer. “This is the EDC’s first foray into the Mexican market and we have been working on this program for over a year and a half,” says the spokeswoman. “EDC has had an asset presence in the country for some time, so we thought it will be beneficial to diversify funding in the market,” adds EDC. Scotia is running the program. A banker there says once the program starts, EDC will expect to issue CP into the Mexican domestic market every 2-3 weeks.
Kimberly-Clark Issues MXP4bn
Kimberly-Clark de Mexico has priced MXP4bn in a dual tranche 5-year floating and a 10-year fixed rate via Banamex and JPMorgan. A MXP1.50bn 5-year tranche of floating rate notes priced at TIIE plus 30bp, in line with guidance. The floating rate tranche received MXP2.5bn of demand according to a banker on the deal. A MXP2.5bn 10-year fixed-rate tranche priced at Mbonos plus 108bp, tight to 110bp area guidance to yield 7.17% on MXP6.15bn of demand, according to the banker. Orders came in from Afores, insurance companies, private banks, investment funds and other banks. The bonds are rated AAA on a local scale. Proceeds will be used to refinance debt and for capex. The deal for the paper and consumer products company priced Tuesday, a day earlier than expected.
Market Awaits OHL Mexico Price
OHL’s Mexican unit was set to price late Wednesday night an IPO that aimed to raise about MXP12bn. Spinning off 30%-35% of the OHL Concesiones Mexico unit, the Spanish builder planned to sell up to 447.8m units, including a 15% greenshoe, or 389.4m shares without, according to its most recent regulatory filings. The sale would raise MXP12.1bn if priced at the MXP27 midpoint of the MXP24-MXP30 range, and the greenshoe is exercised. BBVA and Santander are managing the Mexican portion, with Credit Suisse, Santander and UBS handling the international side. OHL is building, and wholly owns, the Bicentenario elevated Mexico City toll road, Libramiento Norte de Puebla road, and latter phases of the Circuito Exterior Mexiquense road. It also operates the Circuito Exterior Mexiquense Phase I road, Carretera Amozoc-Perote road and Toluca International Airport, of which it owns 87%, 55% and 33%, respectively.
Mexico Gets $1.35bn in Loans
The World Bank has given a $1.25bn 17-year loan to support Mexico’s Oportunidades Program, to help poor families, and a $100m 12-year loan to the Mexico Water Utilities Efficiency Investment Project. The loan for Oportunidades is expected to help benefit 5.8m of the country’s poorest families, it says. The project will cost $9.90bn, $1.25bn of which will be financed by the World Bank and $8.65bn by the government counterparty. The first World Bank loan for Oportunidades was approved in April 2009. The $100m loan for the Mexico Water Utilities Efficiency Improvement Project is aimed at improving the efficiency of utilities, through technical assistance and financing. The project will cost $200m, $100m of which will be financed by the World Bank and $100m by the government counterparty. The project is expected to end on December 2014.