A BP spokesman declines to comment on statements by German Khan, CEO of BP joint venture TNK-BP, stating that his company would acquire several of the oil company’s assets in Venezuela. According to press reports, Khan told reporters TNK-BP would acquire 16.7% of Petromanagas, 40% of Petroperija and 26.6% of Bougeron. BP also declined to comment on the potential value of those assets, though they have been estimated at $1bn, according to an industry banker not associated with the deal. Khan has been looking for assets to acquire in LatAm, the banker says, but this is his first acquisition of oil assets on the continent. He had previously acquired non-oil & gas assets outside of Venezuela, the banker says.
Category: Regions
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PDVSA Sells 50% of Ruhr Oel
PDVSA has agreed to sell a 50% stake in Ruhr Oel GmbH to Russian oil and gas company Rosneft for $1.6bn excluding PDVSA’s share of crude inventory and receivables to be valued at closing, according to the buyer. Ruhr Oel GmbH is a 50/50 downstream JV between BP and PDVSA with stakes in 4 German refining and petrochemical complexes. Venezuela’s national assembly has also approved a 60/40 JV between PDVSA and ENI Lasmo, a subsidiary of Italian oil company ENI to develop Junin Block 5. According to a statement from the national assembly, the block is expected to produce up to 240,000 barrels of super heavy crude a day.
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Ecopetrol Outlook Revised Up
Ecopetrol’s outlook has been revised to positive from stable by Fitch, after Colombia’s sovereign rating outlook was revised. Ecopetrol’s foreign and local currency issuer default ratings remain the same, at BB+ and BBB- respectively. Colombia’s outlook revision to positive reflects the country’s economic resilience and improved macroeconomic performance in relation to its peers, says Fitch. The country’s expected increase in oil and mining is also likely to benefit overall economic activity. Ecopetrol’s ratings reflect its strong financial profile, improving production capacity and adequate reserve levels, adds Fitch. The company’s growth strategy and associated capital investment are also considered aggressive. The ratings reflect the close link with the Republic of Colombia, which owns 89.9% of Ecopetrol.
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Issuers Return to Low Yield Trough
Mexico’s Pemex, and Argentina’s Cordoba Province and IMPSA have retapped their recent bond issues, joining the Province of Buenos Aires this week in adding on at tempting prices. “Spreads have been tightening and we’re not sure when this rallying market will fade. It’s in the interest of those looking to add a bit to do so,” says a London-based EM investor buying Cordoba, which he says priced fairly. Cordoba stepped in for $196m while Pemex has added $250m to its perpetual sold in September, taking advantage of a rally in Mexican corporates and status among investors as the best-performing of a group of perpetual bonds issued in September. Pemex reopened its 6.625% of perp NC5 at 103, the level at which the deal had been announced Thursday morning. The price represents about a 75bp discount from secondary levels of around 104, investors say. Orders were heard reaching $900m. Credit Suisse managed the Baa1/BBB/BBB sale that brings the outstanding size to $1bn. Citi and HSBC managed the original sale. Cordoba, meanwhile, retapped its 12.375% of 2017 at 103.000 to yield 11.716%. Investors spotted the B3/B bond at 104.5-105.0 the day before. The province went for the retap due to reverse inquiry and secondary market performance, bankers say, noting $800m in orders. Citi and UBS, the original leads, managed the sale. Cordoba now has $596m in outstanding 2017s, its maximum authorization say bankers on the deal. The first sale raised $400m on more than $1bn in demand. Finally, IMPSA came out for $50m more of the 10.375% 2015 bonds it sold in September to fund a tender offer at its WPE unit. The B3 deal reopened at 99.000, for a 10.538% yield, through original leads Bank of America Merrill Lynch and UBS.
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Mexico Expected to Hold Rate Steady
Mexico’s central bank is expected to leave its monetary policy rate unchanged at 4.50% today. Morgan Stanley, which agrees with market consensus, says in a research report that unlike other countries in the region that are fighting currency appreciation, Mexico’s currency is not misaligned and inflation trends have been benign. Bank of America Merrill Lynch also expects rates to remain the same and says any intervention to control the currency is unlikely.
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State of Mexico Bags MXP610m Loan
The State of Mexico is arranging a 19.9 year MXP610m enhanced loan from Banorte, which will pay a spread of 125bp over TIIE, which closed at 4.8450 yesterday. Moody’s has assigned a Baa3/Aa2.mx rating. The loan is payable through a trust, to which the state has pledged the flows and rights to 100% of its federal participation revenues and to 25% of its revenues from the Fondo de Apoyo para el Fortalecimiento de las Entidades Federativas. The rating reflects the underlying creditworthiness of the State of Mexico, which has a Baa2/A2.mx rating, as well as the features of the loan. These include a strong trust structure, estimates that cash flows generated will provide strong debt service coverage ratios, a moderate level of reserves and strong historical cash flows. The last rating action Moody’s took with respect to the State of Mexico was on August 27 2010, when Moody’s assigned ratings of Baa3/ Aa2.mx to its MXP2bn Municipal Lending Program.
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Su Casita Defaults on Debt Payments
Mexico’s mortgage lender Hipotecaria Su Casita says it has defaulted on MXP730m, including MXP306m in long-term debt. Su Casita last week presented a restructuring plan to holders of MXP8.74bn in debt, offering longer-dated new debt and equity. The deal represents recovery of 70% in the case of short-term debt, and 51% for long-term debt holders, Su Casita says. As a result, Moody’s downgraded the ratings of the mortgage lender’s senior unsecured debt and global scale local currency to Ca from Caa2. The ratings are on review for possible downgrade. Holders of MXP6.75bn in long-term notes denominated in pesos and dollars would receive MXP1.5bn in new 5-year debt guaranteed by non-operating assets, paying TIIE plus 250bp (7.345% all in), MXP550m in new 3-year instruments guaranteed by non-operating assets, and MXP500m in 10-year subordinated convertible bonds with rates of 3%-8%, representing 10% of the restructured company’s capital upon conversion, as well as capital equal to 19.98% of the restructured company. Moody’s says this is a distressed exchange, which it considers a form of default. Su Casita, 40% owned by Spain’s Caja Madrid, has been seeking alternatives since a deal to sell itself to BBVA Bancomer fell through in September. Rothschild is advising on the restructuring, according to a company official.
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KOF Eyes Panama’s Industrias Lacteas
Mexico-based Coca-Cola bottler Coca-Cola FEMSA (KOF) says in a regulatory filing that it could acquire Panama’s Grupo Industrias Lacteas, the largest milk buyer in the country. The price is not disclosed, although Panama media say KOF could pay upwards of $200m. KOF says the acquisition will allow it to enter the milk and dairy products segment. Lacteas leads the dairy segment in Panama, with 3 manufacturing plants and almost 1,800 employees, according to KOF. The deal is subject to completion of due diligence and government authorizations. Company officials could not be reached for comment.
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Fitch Boosts Colombia Outlook
Fitch says it has improved the outlook on Colombia’s BB+ rating to positive from stable to reflect the country’s economic resilience and improved macroeconomic performance in relation to its peers. In spite of comparatively slow recovery by regional standards, Fitch says Colombia’s 5-year average growth, reaching 4.4% in 2009 and 4.3% in 2010, is expected to outperform the BB median of 3.5% and 3.1%, respectively. The outlook puts Colombia on track for investment grade early in 2011.
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Hochschild Cuts Canada Exposure
Hochschild says in a press release it is reducing its stake in Canadian gold miner Lake Shore Gold to 6% from 35%. The stake is being sold for CAD392m or CAD3.60 per share on a bought deal basis to Canada-based banks RBC Dominion, BMO Nesbitt Burns and CIBC World Markets. Proceeds from the sale will be used to bring the Azuca and Inmaculada projects to production. Wednesday, Hochschild said it would acquire a 30% stake in the Inmaculada gold and silver project in southern Peru from Arizona-based JV partner International Minerals, bringing the total stake to 60%. The deal involves an initial cash consideration of $15m, an agreement to fund the project’s first $100m of capex and a $20m private placement with International Minerals.