Venezuelan oil minister and president of PDVSA, Rafael Ramirez, says PdVSA does not plan to issue debt in 2011, according to Goldman Sachs, which does not state the source of the information. It adds that the company could offer another swap of the 2011 Petrobonos. “PDVSA and the Treasury have been issuing large amounts of dollar-denominated debt not only due to genuine financing needs but to a large extent to satisfy the large pent-up demand for dollar assets and pressure on the VEB to weaken,” says Goldman.
Category: Regions
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Sidetur on Negative Watch
Fitch has placed Sidetur on rating watch negative. The announcement follows the announcement Sunday by the Venezuelan government that it would nationalize the steel company. Fitch rates Sidetur’s $100m 10% senior unsecured notes due 2016 issued through its wholly-owned subsidiary Sidetur Finance. The negative watch reflects the uncertainty regarding the exact time by which the nationalization will be completed and its impact on the company’s operations during this process. This uncertainty will negatively affect labor productivity and the fluidity of day-to-day relationships with the company’s suppliers, customers and banking institutions that provide it with working capital financing.
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El Salvador Plans New Bond
El Salvador is heard readying a new dollar bond for next year, according to DCM bankers. The sovereign, which returned to the markets in December 2009, is heard looking for about $700m at a 10-year maturity. Deutsche Bank and Citi are rumored to have won the mandate for a 1bp fee. El Salvador, rated Ba1/BB, raised $800m last year, paying 7.735% yield on a 2020 bond through Citi and JPMorgan.
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AES Dominicana Whispers Bond Price
AES Dominicana has been whispering in the high 9%s yield for a new 10-year NC5 bond expected to price as soon as today. The subsidiary of US-based power company AES is looking to raise funds to cover a bond buyback of up to $258m, and was due to finish investor meetings today. The issuer is refinancing more expensive debt and has launched a tender for any and all of the $156m in outstanding AES Dominicana 11.000% of 2015 bonds and $102m outstanding of 10.875% of 2013 bonds 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 the November 10 early deadline. The offer expires November 26. Credit Suisse and Deutsche Bank are managing 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.
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DomRep Gets $100m Loan
The IDB has approved a $100m loan to the Dominican Republic to help improve the nutrition, health and educational attainment of children and young people from low-income households. The loan is for 25 years, with a 4-year grace period and a variable interest rate based on Libor. The Dominican Republic has also recently received a $120m loan from the IDB to help enhance competitiveness, and a $249m disbursement from the IMF after a review of its stand-by arrangement.
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Mexico Rates Seen Steady Until 2012
RBC does not expect Banxico to tighten Mexico’s monetary policy rate, currently at 4.50%, until late 2012. “Given uncertainty surrounding whether the large amount of capital flows into EM is temporary or permanent, Banxico is likely to proceed very cautiously in its future decisions and to gauge potential market reactions to these moves,” RBC says. It adds that when Banxico does eventually tighten, it will do so gradually, in 25bp increments. Meanwhile, Morgan Stanley says Banxico could resort to chopping the rate this year. “We suspect that the central bank isn’t ready to ease, though we believe that the next move is more likely to be a rate cut rather than a hike . . . and thus we are removing any tightening from our forecast horizon,” it says.
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Colombian Biofuel Launches Private Raise
Biomax Biocombustibles, a Colombian biofuels producer, plans to launch a private share subscription today to raise up to COP104bn ($56m), it says. In a process open to existing shareholders, Biomax is offering 82m shares at COP1267.61 each, as it aims to increase capital by 77.30%. The offer closes November 25, according to a company official. Proceeds will go toward general corporate purposes and to expand operations. No bank is managing the process, the official says.
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No Credit Impact in LAN/AIRES
Fitch views LAN’s announcement that it is acquiring 98.942% of the outstanding shares of AIRES, the Colombian airline, as neutral to its credit quality. The deal is not expected to materially change LAN’s capital structure or liquidity position over the near term. New debt added to the Chilean airline’s balance sheet is not expected to be material.
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Guatemala Gets IDB Loan
The IDB has approved loans worth $250m for Guatemala to enhance the government’s capacity to mitigate climate change. The financing consists of a $213.20m, 20 year loan with a variable interest rate based on Libor, a $29.40m, 30-year loan with a fixed interest rate, and a 40-year $7.40m concessional loan with a 0.25% annual interest rate.
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Aruba Outlook Negative
S&P has changed its outlook on Aruba’s A minus rating to negative from stable to reflect the rapid growth in the Aruban government’s debt burden due to both the recent global downturn and structural factors such as a narrowing tax base. The agency says general government debt could exceed 51% of GDP this year compared to only 41% in 2008, and could approach 55% to 60% of GDP by 2015. Such a level of debt for a small, open economy with a fixed exchange rate would risk weakening its creditworthiness, possibly leading S&P to lower the ratings by one notch.