Pluspetrol Lote 56, a unit of Peruvian oil company Pluspetrol, is planning to issue bonds denominated in USD and soles in 3 pieces. A first tranche for up to $30m will be due in 5 years, while Pluspetrol will also place up to $100m in a 10 year and a maximum of PES150m ($53m) at the same tenor. The second and third tranche combined may not surpass $100m, the company adds. Credibolsa will lead, according to local press reports. The company did not return calls requesting confirmation.
Category: Regions
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Xstrata to Invest in Peru Mine
Diversified mining company Xstrata is planning to invest $1.47bn to develop its Antapaccay copper mine in Peru. Construction is expected to begin in Q3 and operations are expected to be commissioned in H2 2012. Evolution Securities equity analyst Charles Kernot sees this as a positive move. He adds that the mine should be highly profitable thanks to low production costs, estimated at 90 cents per pound, assuming the price of copper stays at current levels. Copper closed at $3.02 per pound July 7. The company says that the project, together with the other major mines currently in construction or approaching the approval stage, will increase total annual copper production by 50% to almost 1.5m tons per year by the end of 2014. Peruvian authorities recently approved the project’s environmental and social impact study. The mine is expected to be operational for at least 20 years, Xstrata says.
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Bancolombia Mandates US Bond Issue
Bancolombia’s board has approved issuance of up to COP1.2trn ($636.8m) equivalent in 10-year subordinated bonds likely to be denominated in USD, says investor relations manager Alejandro Mejia. He adds that the single-tranche issue will take place in the US. A roadshow is scheduled for July 15-16, he says. Proceeds will be used for general corporate purposes. JPMorgan and Bank of America Merrill Lynch will manage the issue. Proceeds are for general corporate purposes.
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Mexico Visits European Bond Investors
Mexico’s finance minister Ernesto Cordero was heard in Europe this week visiting accounts in a roadshow arranged by BNP Paribas. There are rumors that an issue worth up to EUR700m with a 5-7 year tenor will price this week, though bankers attached to the deal reject the chatter. Another underwriter besides BNP would be expected to join the deal if UMS went to euro market, which would likely depend on rates versus dollars. The sovereign has been telegraphing a euro-denominated bond issue since the start of the year as part of its diversified funding strategy. “It is a market that we continue to explore,” says a source at the issuer this week. Mexico Tuesday raised MXP25bn from a local syndicated bond placement priced to yield 6.13%.
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UMS Prices MXP25bn 5-Yr to Yield 6.13%
Mexico has raised MXP25bn through the syndicated sale of 6.00% coupon MBonos priced at 99.44 to yield 6.13%, which the issuer says is the lowest it has ever achieved on a 5-year locally. “The transaction saw demand of 2.2 times the amount offered, and was distributed among around 48 investors including institutional, local and foreign,” says the finance ministry. Afores took 28%, banks and brokerages 35%, investment funds 9% and foreign investors 13%, it adds. The remainder went to insurance companies, pension funds and public treasuries. The size was the high end of an expected MXP15bn-MXP25bn range. The deal was in the same format as a sale of MXP25bn in 10-year notes and MXP10bn in 30-year UDI-denominated bonds earlier this year. Mexico started offering bond in this way this year to ensure adequate liquidity immediately upon issue, facilitate entrance to global bond indices, and gain broader distribution. Banamex, BBVA Bancomer, ING and Santander managed the new sale, with Bank of America Merrill Lynch, Deutsche, HSBC and JPMorgan as co-managers.
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Peru Steps Up Concession Sales
Peru’s investment promotion agency, ProInversion, plans to move into full gear in July, offering in concession 6 projects prioritized for this year by president Garcia. Juan Suito, ProInversion’s technical director, says the agency will offer transmission lines, back-up energy plants, a hydro plant, 6 airports in the south and an old army barracks in one of Lima’s upscale districts in the coming weeks. “We have moved slowly to guarantee success, but we are confident that in the second half of the year we will meet our targets for 2010,” Suito tells LatinFinance. ProInversion forecasts that the projects will generate approximately $2.5bn this year. Of those set for concession in July, the largest investment would be in the 6 airports. The agency estimates a minimum investment at $226m. All of the country’s principal airports, with the exception of Cusco, will be privatized once the process is concluded. Instead of offering the existing Cusco airport, a separate concession process has been designed for the construction of a new airport. Suito says ProInversion is reviewing the 23 projects originally listed as priorities after additional work showed that several would not be sustainable without government subsidy, which is not an option. “Projects were prioritized with the idea that they would be self-sustainable and we have discovered in the process that several are not, so we have gone back to review these and decide how to move forward,” he adds. Among those under review is the Cajamarca-Bayovar railroad that would allow minerals produced in the highlands to be moved by rail to the cost. A feasibility study determined that the project, initially estimated to cost $1.5bn-$2.0bn, would actually require close to $6.0bn. In the same category are 2 sections of the Pan-American Highway, the country’s principal roadway that runs along the coast. ProInversion is preparing to redo feasibility studies for the northern section, from Piura to the border with Ecuador, and the so
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IFC Provides Bancolombia Risk Facility
The IFC has signed a facility with Bancolombia that is says will execute up to $400m of risk-management transactions. “This IFC facility, the first of its kind to a Colombian bank, will strengthen the bank’s ability to provide risk-management instruments to local companies,” says the multilateral. It adds that the deal will increase the capacity of Colombian companies to access risk-hedging products such as cross currency and interest rate swaps. “This will allow these companies to better manage their exposure to foreign exchange and interest rate risk, which could result in lower-income volatility and a more stable cash flow,” says the IFC. The IFC will act as a counterparty on cross currency and interest rate swaps, allowing Bancolombia to cover clients in manufacturing, construction, and tourism.
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Colombia Reported Growing Bond Issuance
Colombia is raising borrowing on local market and international markets by approximately $2bn to replace revenue from postponed privatizations, according to wires, which cite finance minister Oscar Ivan Zuluaga. It will borrow $500m in international bonds, $500m more from multilaterals and issue COP2trn ($1.06bn) to cover COP4.5trn that had been expected from privatizations, including Isagen and regional utilities, say the reports. Separately, the IDB has approved a $200m loan for Colombia to help finance a program to improve controls over the finances of territorial entities. The loan has a repayment period of 20 years and 5 years of grace, with a rate based on Libor.
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Peru Buyside Bets on Infrastructure, RE
Real estate and infrastructure stand out as attractive sectors for Peru’s local investors, according to panelists at last week’s LatinFinance Andean Investment Forum in Lima. They also want regulators to prioritize boosting secondary market liquidity. There is a large infrastructure gap in Peru, says Alejandro Perez-Reyes, CIO of Prima AFP. He adds that pension funds have cash to allocate, but the main hurdle is time spent building tailored investment vehicles. “It takes a long time for the process before [infrastructure funds] can raise money,” says Perez-Reyes. He sees health care as a growth area in Peru over the next few years, though the market lacks entities to invest in. Javier Freyre, CEO of InVita Seguros De Vida y pensiones, prefers infrastructure projects linked to inflation. He also highlights real estate, including direct investment in housing projects, as a strong growth area for the next few years. Both sectors are great for buy-and-hold investors, he says. However, more secondary market liquidity is needed to develop equities and local bonds. “We are willing to take a lot of risk in local currency, but there are some artificial barriers to entry by having a less liquid market,” says Danilo Simonelli, head of EM fixed-income at Ontario Teachers Pension Plan. He adds that Peru is a “success story” with strong growth in several sectors. Developing a repo market would be one useful tool, Simonelli notes. Jose Martinez, CIO at Rimac Seguros, agrees that allowing short sales and broadening availability of derivatives for institutional investors should help. Perez-Reyes says he would like to see AFPs be able to lend shares.
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Darby Sells Termobarranquilla Stake
US-based private equity shop Darby Overseas says it has sold its 28.7% stake in Colombian power plant Termobarranquilla to Golden Gate Energy Investments, which is owned by a Colombian consortium. Terms were not disclosed. Darby, through its DLAMF I fund, acquired FirstEnergy Corp’s direct and indirect interests in Termobarranquilla in January 2004. The Termobarranquilla sale represents the tenth exit for DLAMF I, which now has 2 portfolio companies remaining. Darby has over $572bn in AUM.