Bancolombia has sold the first non-sovereign cross-border debt deal from Colombia in over 8 months, $620m in 2020 Tier 2 bonds at the tight end of guidance. Colombia’s largest bank took advantage of last week’s successful sovereign bond and overall positive sentiment post-election to drum up nearly $3bn in orders. The Baa3/BB+ issue came at 98.418 with a 6.125% coupon to yield 6.341%, or UST plus 337.5bp, versus 337.5bp-350.0bp talk. It was upsized slightly from $600m. The bond traded up 1.5 points in the gray Monday afternoon, say investors. “Subordinated debt allows for exposure at a higher yield to the highest quality banks in the region,” says a New York-based participating EM account, spotting the concession at about 12.5bp. A banker on the deal says the concession accounts for an extension and subordination versus the bank’s existing 2017s trading at UST plus 315bp. The bank’s board approved a COP1.2trn ($640m) equivalent issue earlier this year. It plans to use proceeds for general corporate purposes. BofA Merrill Lynch and JPMorgan managed the sale, after running investor meetings in the US and Europe last week. It was the bank’s first dollar issue since 2007, when Bancolombia sold $400m in 6.875% of 2017s through JPMorgan and UBS.
Category: Regions
Positive Outlook for Ecopetrol
S&P has changed the outlook on Ecopetrol’s BB+ rating to positive from stable after a similar move on the Colombia sovereign. The action, says S&P, reflects the state-owned oil company’s leadership in the country’s oil and gas industry, low production costs and its proven access to the capital markets. Ecopetrol said last week it plans to invest $80bn from 2011-2020, with the aim of producing 1m barrels per day (bpd) of oil by 2015. The amount implies a significant pickup to spending in recent years, and should also boost the issuer’s capital markets needs.
Mexico Leaves Rate Unchanged
Mexico’s central bank has left its monetary policy rate intact at 4.5%, in line with market expectations. Barclays says the bank’s statement includes a “fairly tranquil reading of external conditions and slightly more upbeat look on the domestic demand.” This, says the shop, should limit rate cut speculations in coming months, though it does not believe this signals imminent intentions to begin normalizing monetary conditions. Barclays expects unchanged rates until Q2 2011. Morgan Stanley notes that the MXP has weakened from its April levels of around MXP12.20/USD, reducing the need for the bank to adjust the rate.
TMM Plans Local ABS
Mexican maritime logistics provider TMM plans to issue a MXP10.5bn ABS July 27, according to a banker at Value Casa de Bolsa, which is managing the transaction. The 2030 bonds, rated AA on a national scale, would pay a spread over TIIE and were planned to replace MXP9bn in 3 outstanding service contract receivable securitizations. They will also be used to refinance smaller bank debt and working capital. In the largest and most recent of the 3 prior deals, TMM sold MXP4.39bn in 2028 bonds at TIIE plus 219bp in July 2008. TMM has a fleet of boats servicing offshore oil rigs, in addition to other transportation and port operation business lines.
Televisa, Inbursa Exit Volaris
Grupo Televisa and Inbursa have sold their stakes in Mexican low-cost airline Volaris to an investor group made up of Indigo Partners, Discovery Americas and several individuals including Pedro Aspe and Emilio Diez Barroso Azcarraga. Televisa says it got $80.6m for its 25% holding, which it bought in late 2005 for $49.5m. Evercore Partners and Caoba Capital advised Volaris.
Canacol Sees Opportunity in Colombia Listing
Canada-based oil company Canacol Energy, which plans to list its shares in Bogota in the next few weeks, hopes to become Colombia’s next oil play, following in the footsteps of Pacific Rubiales, vice president Kevin Flick tells LatinFinance. “Retail investors are investing in Pacific Rubiales and looking for the next oil play in Colombia. There is a lot of opportunity for us to ride the paved road,” he says. Canacol is working with Citi, the same bank that advised Pacific Rubiales on a listing. Looking beyond Bogota, Flick is enthusiastic about the integration of Colombia’s stock exchange with those in Lima and Santiago, which some say could happen by the end of the year. Flick says the integration would provide access to larger liquidity pools and lower financing costs. Canacol trades on the TSX Venture Exchange. It has a market cap of CAD366m and 333.3m shares outstanding.
S&P Revises ICA Outlook to Positive
S&P has revised the outlook of Mexican construction company Empresas ICA to positive from stable and affirms the BB minus rating. The improved outlook reflects the company’s adequate performance, resulting from projects the company was awarded in 2009 and Q1, despite a more challenging economic environment in Mexico. S&P expects ICA’s credit measures to improve during the next couple of years thanks to a likely increase in revenue of about 15% per year. For the 12 months ended March 31, ICA posted Ebitda interest coverage, total debt-to-Ebitda and funds from operations-to-total debt rations of about 2.7x, 5.3x and 9.9%, respectively, versus 2.4x, 5.2x and 16.7%, respectively during the corresponding period in 2008, says S&P.
Air Jamaica Ratings Lift Off
S&P has upgraded Air Jamaica’s ratings to B minus from CCC and removed them from credit watch developing. The outlook is stable. The upgrade comes after the government of Jamaica announced it would assume the airline’s debt of $533m following its sale to Trinidad & Tobago-based peer Caribbean Airlines (CAL). As part of the deal, CAL will finance Air Jamaica’s operations for a transition period of up to a year. Afterward, Air Jamaica will cease to provide air services, and CAL will take over its routes.
Mexican Junk Retailer Lands $200m Debut
Grupo Famsa has raised $200m in the cross-border bond market, its first such deal, and only the second Mexican high-yield issue since the bond markets reopened following a May-June drought. The 2015 NC3 priced at 99.063 with a 11% coupon to yield 11.25%, according to investors, in line with price talk earlier this week of low-to-mid 11%s. The bond was up slightly at Thursday’s close, according to an investor. Famsa, which has issued in Mexico’s domestic DCM, is raising funds to refinance debt as well as for general corporate purposes. Credit Suisse managed the sale, rated B+.
Aval Buys Into CentAm Via Credomatic
Colombian conglomerate Grupo Aval – the parent company of Banco de Bogota, Banco Popular and Corficolombiana, among other financial institutions – says it has agreed to acquire Panama-based BAC-Credomatic for $1.9bn. Analysts view the deal as a positive strategic move for the Colombian group, which is expanding into Central America. “This is a positive move for Aval because it allows it to enter the Central American market with a strong position,” says Interbolsa equity analyst Jose Restrepo. Aval is paying a “reasonable” price for Credomatic, says David Pelaez, equity analyst at Colombian brokerage Bolsa y Renta. He calculates that the deal value is equivalent to 12.8x Credomatic’s 2009 P/E ratio. Pelaez adds that Credomatic is profitable and a good fit with Aval’s banking operations. The buyer does not reveal how it intends to finance the acquisition, but analysts point to rumors of Aval’s intentions of selling equity in the US as a way to pay. Restrepo says the group could also issue a bond to finance the deal, or join forces with a subsidiary such as Banco de Bogota. Banco de Bogota announced in June it had made an offer for Credomatic, but General Electric, which holds 75% of the target, did not respond by the deadline. Besides Panama, Credomatic, which had $7.7bn in assets in 2009, has operations in Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Mexico and Florida. Credit Suisse was Credomatic’s financial advisor while Latham & Watkins provided legal advice. Aval’s legal advisors were Davis, Polk & Wardwell, Martinez Neira Abogados and Arias & Munoz.