Mexican conglomerate Alfa has set bank meetings for New York Tuesday and Mexico next Friday, 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 $600m 3-year bullet facility is expected to be syndicated. 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.
Category: Regions
More Mexico IPOs in 2011: Bolsa Boss
Mexico’s bolsa will continue to see IPOs in 2011, according to its president. It could also see its first real estate investment trust debut before year-end. “I don’t expect a boom, but I do expect 10 IPOs,” Luis Tellez, president of the Bolsa, tells reporters in New York. Like this year’s issuers, 2011 should see a mix of large and small and foreign and domestic companies. “OHL will open the eyes of many international companies,” he says, noting that oil services providers are watching OHL’s MXP12bn IPO with interest. Tellez also says the Bolsa has seen interest from medium-sized issuers in the health sector, which could lead to some local players going public. Thanks to limitations lifted this year, he says, real estate investment trusts (REITs), or Fibras as they are known in Mexico, can now list. The first REIT is already preparing to file for approval, Tellez says, declining to name the issuer. Retailer Grupo Chedraui broke a nearly 2 year IPO deadlock in May, raising MXP5.23bn. It was followed by smaller debuts from broker Actinver, wood production company Proteak and health club operator Sports World.
OHL Slides at Mexico Debut
Shares of OHL Concesiones Mexico traded down in their first session following an MXP11.20bn IPO, which came at the low end of the targeted range. The Mexican concession unit of the Spanish builder priced 447.8m shares, including a greenshoe, at MXP25.0, just inside the MXP24.0-MXP30.0 range. The stock then closed down 4.0% at MXP24.0 Thursday, while the Bolsa fell 0.3% on the day. “It is not so important that it came at the lower end, as we are talking about assets with years of income generation,” Pablo Ortiz, equity analyst at Interdin Bolsa in Madrid, tells LatinFinance. OHL’s Mexican road assets feature a guaranteed minimum income, unlike some concession contracts. “This transaction will open the market for new listings,” Luis Tellez, president of Mexico’s Bolsa, tells reporters in New York Thursday. BBVA and Santander managed the Mexican portion, with Credit Suisse, Santander and UBS handling the international side. Proceeds will fund investment in Mexico, OHL says. The deal leaves the company with a 70% stake in the unit. It is building, and wholly owns, the Bicentenario 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.
BCP Eyes Further Funding
Banco de Credito del Peru (BCP) has finished its issuance for this year but will likely return for more in 2011. “We’re always looking for funding,” Gonzalo Alvarez-Calderon, BCP’s head of international business, tells LatinFinance. He adds that BCP has been seeing 20% annual loan growth, which it will continue to support by borrowing. The bank has not decided how much it will look to raise next year. It recently closed a $350m 3-year syndicated loan priced at 175bp over Libor, which it upsized from an original $300m. The deal via Citi and Standard Chartered was syndicated to 16 banks, including Chang Hwa, Bank of Taiwan and Malayan Banking Berhad. Alvarez-Calderon says the leads were incentivized to bring in Asian institutions. Total demand was $387m. The deal is for general corporate purposes, in particular to fund loan growth. The facility follows an $800m September issue of 2020 bonds. The BBB/Baa2 deal priced at 99.763 with a 5.375% coupon to yield 5.406%, or UST plus 265bp, the tight end of 275bp area guidance. Bank of America Merrill Lynch and Deutsche Bank managed the sale, the first bond from BCP since a $250m hybrid in November 2009.
Chevron Selling CentAm Assets
Chevron is selling off its fuels marketing and aviation business in the Caribbean and several Central American countries, according to a company spokesman. The spokesman indentifies Nicaragua, Costa Rica and Belize as countries in which Chevron, through its Texaco label, would look to sell off businesses. The company is not soliciting bids for its operations in El Salvador, Honduras, Panama, Mexico, Brazil, Guatemala or Colombia, the spokesman says. Chevron regional manager Juan Habed was quoted in wires saying the company began negotiating with potential buyers in March, but has not reached any agreements.
Honduras Gets Fiscal Reform Loan
Honduras will receive $45.8m from the IDB to support the country’s fiscal reforms, and improve its tax system and state utility revenues. The financing will consist of a $32.06m, 30-year loan with a 5.50-year grace period and a fixed income rate, and a $13.74m, 40-year loan with a 5.50-year grace period and an annual interest rate of 0.25%.The financing will be disbursed in 2 tranches of $22.9m. The first will come after the approval of a tax reform designed to increase collection rates, efficiency and equity in the tax system. The second tranche will come after the approval of other tax regulations. The country will also enact a law against tax evasion. In addition, the government will take steps to raise the revenues of the state-owned electricity company, Enee, and the telecommunications company, Hondutel.
Bavaria to Spread Out COP Issuance
Bavaria will likely spread issuance of COP2.5trn in local bonds over the next 3 years, according to a banker away from the deal. The brewer will instead issue bonds with tenors of 5, 7, 10 and 15 years, the banker says. Correval is the lead. The Colombian subsidiary of global brewer SABMiller recently requested permission for the issuance from the country’s financial regulator. The banker says Bavaria is unlikely to go to market with a single, COP2.5trn issuance, since the largest currently pending deal is Ecopetrol’s COP1.0trn bond. Bavaria had previously issued debt in the local market prior to its acquisition by SABMiller, and still has about COP2.5trn outstanding in AAA rated bonds maturing in 2013, 2014 and 2015, the banker says. He adds that proceeds of the new issuance could be used to pay down the older bonds. There are few comps, though Colombian dairy Alpina last year issued AA+ 10-year notes at IPC plus 6.70% and AA+ 15-year notes at IPC plus 7.40%.
Peru Leaves Rate Unchanged
Peru’s central bank left its rate unchanged at 3.00%, in line with expectations. The bank says it decided to leave rates on hold as annual inflation in October was negative for the second consecutive month, primarily because of a drop in food prices. Celfin expected the rate to stay on hold, also citing falling consumer prices. Morgan Stanley expects the bank to pause for the remainder of the year. It had previously expected to rate to be tightened to 4.00% by the end of 2010.
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.
BBVA Peru Hits Wide End
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.