S&P has placed its BBB minus senior unsecured debt rating on ICA Panama’s $150m 20-year bonds on credit watch with negative implications. The bonds are backed by collection rights on Corredor Sur toll road revenues. ICA recently agreed to cede control of the road to the Panama government. “The CreditWatch listing reflects our concerns that the government’s control over ICA Panama could lead to future actions that limit the project’s operating activities and payment capacity,” says S&P. It could lower the rating one notch to reflect the institutional and country risk of the Republic of Panama, it adds. It could also lower the rating further if the debt structure is affected. Corredor Sur is a 19.5km urban toll road in Panama connecting the Panama City downtown area with Tocumen International Airport. The government awarded ICA Panama a 30-year concession to construct, maintain, and operate the road, which has been fully operational since February 2000.
Category: Regions
Ecopetrol OKs Bond Issuance
At its annual general meeting, Ecopetrol’s shareholders approved a COP5.5trn ceiling for non-convertible bond issuance, the company says. It says bonds can be issued in Colombia or abroad in 1 or several tranches over the following years. The state oil giant does not specify for how many years the ceiling will be in effect. A company spokesman says Ecopetrol is not working on a bond issue at the moment. Last year, the Colombian oil giant issued $1.5bn in bonds. Besides Colombia, where it has 60% of total production, Ecopetrol is involved in exploration and production activities in Brazil, Peru and the US.
Fonacot Plans Domestic Floater
Mexico’s Fonacot is planning to raise MXP1.95bn through the sale of floating-rate bonds in the domestic market. The issuer is targeting April 28 for the sale of the 2013 bonds, according to regulatory documents. Scotia and BBVA Bancomer are managing the sale, rated AAA on a national scale. Fonancot plans to use proceeds to add to its lending capability. The state-backed lender last visited the markets in December, selling MXP1.5bn in domestic bonds backed by consumer loans.
Colombia Not Seen Hiking Rates
Colombia’s central bank is expected to keep its monetary policy rate at 3.5% today. Morgan Stanley says the bank does not appear to be in a hurry to hike rates as inflation data is still benign. “We suspect that recovery may prove stronger [than expected] and the central bank would shift into tightening monetary policy in 2H10,” the shop says. Colombia’s Interbolsa also sees no change in policy. “We see the central bank expects a slow recovery and is more afraid of a sudden increase in inflation than another slowdown in the economy,” it says. Annual inflation as of February was 2.09%, the low end of a 2.0%-4.0% target range, according to the central bank.
ICA Selling Panama Concession
Mexico’s Empresas ICA says it has reached an agreement to sell its Corredor Sur highway concession to the government of Panama for $420m. ICA says the concession has $146m in debt and that it is still to be determined whether the buyer will assume this, in which case the sale price will be reduced. As part of the deal, ICA will continue to operate the concession. Panama president Ricardo Martinelli also announced the country is acquiring a 51% stake in Corredor Norte from Mexico’s Proyectos y Construcciones. It does not say how much it will pay. These acquisitions are part of Martinelli’s plans to repurchase highway concessions.
Peru Assesses Financing Options
Peru is assessing market conditions with the aim of increasing stability and improving the yield curve for foreign investors, Peruvian finance minister Mercedes Araoz tells LatinFinance. “We’re using bond issues, for example in local currency, to finance our public investment plan,” she adds. Araoz says financing has been done longer than 32 years at attractive rates. “Part of our policy is to have good liability management,” she adds. “We need to minimize long term risks.”
ICA Bags Pemex Contract
Mexico-based ICA Fluor says it has won a $622m Pemex contract for the engineering, procurement and construction of 2 low-sulfur gasoline projects in Veracruz and Oaxaca. ICA expects to complete the projects in 2013. It also says it will book $311m from the deals during the first quarter.
GMAC Parks Mexico Auto ABS
GMAC Mexicana has raised MXP1.39bn via the first pure securitization of auto loans in Mexico, say officials managing the deal. The 2015 deal will pay interest at the TIIE plus 250bp, and drew orders of MXP1.82bn, according to a banker managing it. The notes are backed by a pool of 15,221 auto loans totaling MXP1.9bn with an average life of 1.3 years. Given the rising number of such loan activity in Mexico, bankers are optimistic that this transaction could open the door for others. Banamex and HSBC are managing the sale, rated AAA on a national scale. There is also a MXP245m subordinated piece, rated A, that GMAC plans to hold.
Cemex Grows Convert Sale
Mexican cement maker Cemex has raised $650m from the sale of convertible bonds, clinching more than the announced $500m, while tightening the price. The 2015 optionally convertible securities pay a coupon of 4.875% and are convertible immediately in to ADSs at a 30% premium to the March 24 closing price of $10.46. Price talk had initially been 5.25%-5.75%, and a conversion premium of 27.5%-32.5%, according to a banker on the deal. The tightening comes on the back of demand amounting to 5x-6x the offer. The deal is the latest in a long line of transactions aimed at reducing Cemex leverage. It follows a December sale of MXP4.1bn in domestic bonds convertible into its CPO shares to fund the repurchase of MXP4.1bn in various local bonds. Cemex also last year renegotiated $15bn in bank debt, made a major asset sale and raised $1.8bn in equity. It then sold $1.25bn in 2016 bonds in December, reopening the issue for another $500m in January, and EUR350m in bonds in December. Citi was global coordinator on the convertible transaction, with Bank of America, Barclays, BBVA, BNP, HSBC, JPMorgan, RBS and Santander as bookrunners.
Ecuador Leans on Locals
Ecuador is planning to raise at least $1.5bn in the local market this year, finance minister Maria Elsa Viteri tells LatinFinance. “At a minimum, we’ll get $1.5bn,” says the minister. “If the market wants more, there will be more,” she adds. Issuance will mostly be in the form of bonds with tenors of 5-10 years, where the government detects strong demand, but also at the short end. A Quito-based banker says the government could place $200m-$300m tranches of 5-7 years, mainly with the social security system. “Prices are very attractive for the sovereign,” adds the banker. Ecuador recently sold 13-month paper at around 4%. “The market wanted a lot more,” says Viteri. She does not expect the domestic program to crowd out local corporates. “There’s room for everybody,” says the minister. Local bankers say the country – which is exiled from international capital markets after defaulting on 2 bonds – has a $4bn gap to make up this year. Viteri says Ecuador needs more like $3.3bn in financing to maintain investment at a minimum level. Of that, $1.8bn will come from oil revenue. Another $950m can come from multilaterals, says Viteri, and Ecuador is also considering bilateral lines from Venezuela, Russia and China. However, bankers say that Ecuador will only extract $700m-$1bn from the local market and roughly $1bn from multilaterals. Another forward sale of oil to China is possible, but funding is seen constrained at around $2.5bn. “The difference will be a difference in spending,” says a senior Quito-based banker with knowledge of the sovereign’s requirements. The government is also being pitched an oil hedge to protect itself from over-exposure to crude price fluctuations. Viteri says that a deal could be signed this year, though there is no urgency to proceed given the state of world markets. “This year we’ll decide when and what,” says Viteri. The minister adds that Ecuador will continue to make coupon payments on the 2015 bond.