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.
Category: Regions
Posted inDaily Brief
Alfa Invites Banks to Loan
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.
Posted inDaily Brief
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.
Posted inDaily Brief
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.
Posted inDaily Brief
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%.
Posted inDaily Brief
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.
Posted inDaily Brief
Isagen Bonds Oversubscribed
Colombian power holding company Isagen sold COP400bn ($215m) in local bonds on COP1.3trn in demand. The notes were issued in 3 tranches. A 2016 COP100.00bn piece pays a coupon of IPC plus 3.68% and priced at 112.10 to yield 6.10%. A 2019 COP130.00bn piece pays a coupon of IPC plus 4.30% which priced at 115.60 to yield 6.73%, and a 2024 COP170bn piece pays a coupon of IPC plus 4.83% and priced at 119.90 to yield 7.28%. All bonds were rated AA+. Proceeds will be used for capex. Santander led the sale.
Posted inDaily Brief
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.
Posted inDaily Brief
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.
Posted inDaily Brief
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.