RAM Power, a US renewable energy company, has closed $160m in debt financing, via IFC, which will go towards the second phase expansion of its San Jacinto-Tizate geothermal power project in Nicaragua. The borrower would not disclose the spread over Libor on the floating rate loan, but the company expects to swap it to a fixed-rate loan for 7%-8%. Initial drawdown is expected to occur in December 2010, with final maturity in 13 years and an 8.5-year average life for the senior debt. The $140m in senior construction and term loans and $20m in subordinated debt are available for general corporate purposes, in order to complete the second phase of this project. Combined with phase 1, it will provide 72MW of power to Nicaragua, to be completed by the end of 2011, according to Hezy Ram, CEO of Ram Power. IFC, IDB, CABEI, DEG, FMO, OeEB and Proparco were lenders on the transaction. Ram says that IFC all of the subordinated debt along with $30m in senior debt. IDB provided $30m in senior debt, with Proparco providing $20m, DEG $19m, FMO $19m, OeEB $15m and Cabei $7.6m. “We had well over $200m in demand for $140m of senior debt,” says Ram.
Category: Regions
Peru to Get IDB Loan
The IDB has approved a $110m loan to Peru to reduce poverty by strengthening its principal social protection and labor programs. The loan comes from IDB’s ordinary capital and has an amortization period of 20 years with a 5-year grace period and an interest rate based on Libor.
Alfa Offers Spread on Acquisition Loan
Mexican conglomerate Alfa 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. Invites have been sent out but meetings have not been fixed, according to people close to the transaction. Meetings are expected first in Mexico City, followed by New York. 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.
Fitch downgrades Posadas to B
Fitch has downgraded Mexico’s Grupo Posadas’ local currency and foreign currency IDR to B from B+ and national scale rating to BB+ from BBB+, with a stable outlook. The ratings action reflects continued deterioration on operating performance and financial indicators due to higher indebtedness, operating trends that have not improved as anticipated and the sale of Nuevo Grupo Aeronautico (NGA), including the airline carrier Mexicana, says Fitch. These factors have resulted in the company’s inability to gradually reduce leverage, adds the ratings agency. “Posadas’ ratings are supported by the company’s solid business position, strong brand name and multiple hotel formats,” says Fitch in a release. “Conversely, the ratings are tempered by increased leverage, exposure to currency fluctuation which can pressure liquidity and industry cyclicality,” it adds. Posadas has experienced weak operating results, which Fitch says is a result of lower vacation club revenues, and lower revenue per available room in its coastal hotels in part due to the perception of violence in Mexico and stabilization of urban destinations. This has not been able to compensate increased indebtedness and extraordinary charges due to the sale of NGA. The ratings also take into consideration the industry’s high correlation to economic cycles, which negatively affects operating indicators in downturns. Fitch adds that the company’s liquidity position is manageable and Posadas’ cash levels, excluding cash needed for operations, and credit facilities allow it to cover margin calls.
AES Dominicana Funds Bond Tender
AES Dominicana has raised $284m in new 10-year NC5 bonds to fund a buyback of more expensive debt. The first cross-border issue from a Dominican corporate in more than 3 years drew about $800m in orders, according to bankers on the sale. The B minus bond priced at par with a 9.50% coupon, the tight end of 9.50%-9.75% yield guidance. The bond traded up 2 points Friday afternoon, according to a trader. The subsidiary of US-based power company AES launched a tender last week for any and all of the $156m in AES Dominicana 11.000% of 2015 bonds and $102m of 10.875% of 2013s issued by its Itabo unit. It is offering holders $1,031.25 per $1,000.00 for the AES bonds and $1,030.50 per $1,000.00 for the Itabo bonds, plus a $30 premium on each if tendered prior to a November 10 early deadline. The offer expires November 26. Credit Suisse and Deutsche Bank managed both the new bond sale and the tender offer. The last Dominican corporate cross-border issue was a $175m 10-year from EGE Haina in April 2007, according to Dealogic.
China’s CCB Pushes RMB Trade
China Construction Bank (CCB) sees scope to significantly increase volume in its settlement business supporting RMB-denominated trade between LatAm and China. “We think it could be a very big opportunity for our bank,” says John Weinshank, head of trade finance and corporate banking at CCB’s New York office. Since the end of April, CCB has done over $300m in deals for international trading companies shipping LatAm commodities to China. Much of it is Argentine soya beans, but the deals also include softs and metals from Brazil and Chile. “By the end of the year it will be more like $500m [in deal volume],” Weinshank tells LatinFinance. Putting contracts in RMB can give suppliers to China an edge over competitors, while also decreasing their reliance on the dollar, says the banker. Payment terms are given up to 360 days and CCB settles for the LatAm exporter in dollars. “Their functional currency is not the dollar, and the dollar’s appreciating while the RMB’s appreciating,” says Weinshank. “If they’re on the selling side, it would make more sense for them to have a more valuable currency that they will translate back to their local currency,” he adds. The product is particularly suited to clients with global flows. They can have proceeds remitted in dollars, or keep an RMB deposit and benefit from any appreciation in the Chinese currency. RMB deposits would also generate a higher rate than USD. “If Codelco or Vale came to us and said we have RMB exposure, can we settle it with you, we’d be delighted,” says Weinshank. The CCB business is run from New York, but the bank is considering establishing offices in region. A Brazil branch looks most imminent, following several trips to the country by senior CCB bankers. The New York branch is not yet authorized to lend to LatAm corporates. CCB is one of the biggest banks in the world.
Ecuador Gets a B
Fitch has upgraded Ecuador’s foreign currency issuer default rating to B minus from CCC, with a stable outlook, because of increased bilateral lending and a decrease in financing constraints due to the recovery of international oil prices. Loan agreements with China worth $2.6bn and financing from the social security agency have provided Ecuador with resources for budgetary support and infrastructure spending, says Fitch. However, the upgrade did affect spreads in the secondary bond market, with analysts and economists saying the rating is still not high enough to attract institutional investors. “There has been very little debt being traded since the default, and I don’t expect this to have a significant impact,” Eduardo Checa, president at Analytica Securities, tells LatinFinance. A LatAm economist says institutional investors will remain uninterested in Ecuador’s debt. The country’s ratings are constrained by weak willingness to service debt and limited transparency and disclosure of public finances information, adds Fitch. “Ecuador’s limited sources of recurrent and reliable financing as well as the high dependence of external and fiscal accounts on oil prices will continue to weigh on the sovereign’s capacity to service its outstanding debt commitments,” says Erich Arispe, director in Fitch’s sovereign group. Fitch adds that Ecuador’s growth prospects remain low for regional standards. The report adds that while enhanced willingness or strengthened capacity to service outstanding debt could improve Ecuador’s credit rating, deterioration in fiscal and external accounts or further unwillingness to service outstanding debt could lead to a ratings downgrade.
Seoul Appoints Senior LatAm Advisor
Botsford Global says it has been appointed senior advisor for LatAm and the Caribbean to the Korean government. Washington DC-based start-up Botsford will help source projects for Korean corporations throughout the region, including greenfield mining ventures, company founder Mark Botsford tells LatinFinance. Korean companies are expected to team up with US entities to invest in LatAm. Botsford is also in talks with the Singapore government for a similar arrangement to provide strategic LatAm advice. It expects to have a decision on that by the end of November. Botsford Global was set up in July. Botsford previously managed family investments locally and internationally, including defaulted Argentine bonds. Before that, he was senior advisor at Adalbert Krieger Vasena & Associates and has advised international companies including Phillip Morris and Exxon on their business in Argentina.
IDB Gives Ecuador $100m Loan
The IDB has given Ecuador a $100m 25-year term loan, with a 4-year grace period and a variable interest rate based on Libor, to help transform the health sector in Ecuador. It will improve the quality of health services and also go towards medical information system and management of the Ministry of Public Health.
MetAnalisis Reports Carso Spin-off Approval
A meeting of Grupo Carso shareholders Thursday approved the spin-off of the group’s mining and real estate businesses, according to a research report by MetAnalisis. Each Carso shareholder will receive proportional shares in each of the 3 businesses, which are to be listed on the bolsa, according to MetAnalisis. The transaction is expected to be completed by the end of the year. Representatives from Carso could not be reached for comment.