The board of Colombian power sector giant ISA has approved a share sale that could total $180m, based on the company’s COP11,300 ($5.62) closing price Wednesday. In a statement issued late Tuesday, the company says it has submitted a plan to the financial sector regulator to issue 32m ordinary unit through bookbuilding, whose date is yet to be determined. Proceeds are destined to finance the company’s investment plan and improve capital structure. No banks have been appointed to lead a share sale, and one local banker says no invitations appear to have been sent out requesting pitches. The news comes on the back of the company’s Q3 results, which highlight an 11% rise in operational income, a 9.7% rise in Ebitda and a 73.4% surge in net income over the corresponding year-ago period to COP315bn.
Category: Regions
BCP Sniffs COP DCM Opportunity
Fresh from Chilean financing, Banco de Credito del Peru (BCP) is not in immediate need of raising funds abroad, though it could consider a Colombian peso-denominated transaction in the future. “There is a possibility to issue in Colombia in the future, but no concrete plans. It would be an interesting diversification, like the local Chilean bond,” says a BCP finance official. He adds that the bank has no immediate liquidity or capital needs that would motivate such a sale. CFO Alvaro Correa has recently been cited in the local press talking about the possibility of such an issue. BCP this week sold $106m equivalent in UF-denominated 2014 bonds in the Chilean local market, the second-ever debt sale by a foreigner in Chile. The Peruvian bank placed UF2.7m ($106m) in 2014 bonds, priced at 97.92 with a 3.50% coupon to yield 3.97%, or 140bp wide to corresponding government bonds, according to a banker managing the sale. This equated to about 5.4% in dollars.
Wamex Falls Short in Uncertain CCD Market
Mexico’s Wamex has brought the second-ever certificado de capital de desarollo (CCD) transaction to Mexico’s market, heading a pack of several deals still pending negotiation. The MXP750m 2019 deal is smaller than the MXP1bn initially aimed for, as Wamex and other would-be issuers have been mired for months in negotiations with Mexico’s pension funds and other investors. The structure allows the Afores – who cannot invest directly in equity – to take private equity exposure. A banker managing the sale notes that the size reduction came partially as a consequence of being the first of its kind. Wamex will use proceeds to create a PE fund making investments in Mexican companies or projects with investors receiving a variable return. Investors will receive an amount to repay 100% of the capital invested in private companies, plus an additional 12.5% preferred return. After that, investors will get 80% of additional proceeds, with Wamex keeping the rest. The individual CCDs priced at MXP100 each. Five institutional investors participated, the banker says. Credit Suisse managed the deal, the second CCD since the asset class was defined by regulators earlier this year. Red de Carreteras de Occidente – the Farac road concession owned by ICA and Goldman Sachs – sold in early October a MXP6.55bn CCD giving investors a share of revenue flows from toll roads. Macquarie is also in line to bring a fund structure similar to Wamex, also via Credit Suisse, expected in early December. Restaurateur Grupo House is also in the pipeline, offering investors a cut of a set of new restaurants in a CCD through HSBC. Others are looking to follow, though bankers note that negotiations are slow and only a small minority of Afores are willing to do necessary due diligence.
Peru to Keep Rate at 1.25%
Peru’s central bank is widely expected to keep its monetary policy rate at 1.25% during tomorrow’s meeting. “With inflation broadly inline with the central bank’s forecasts and significant monetary policy stimulus already in the pipeline we expect the central bank to keep rates on hold despite inflation data that is now below the lower bound of the target range,” Morgan Stanley says. Bank of America-Merrill Lynch says, “A still incipient recovery and subdued inflation will likely keep the policy rate unchanged at 1.25%.” Barclays agrees and expects the bank to stay on hold, in line with other central banks in the region.
Moody’s Revs Up Ford Mexico Rating
Moody’s has lifted Ford Credit de Mexico to B1.mx from Caa1.mx and keeps it on review for further possible upgrade, following a rating action at the parent company. Ford was raised in the US owing to progress in cutting costs and boosting market share, which helped it post a surprisingly strong Q3 result. The Mexico rating highlights very weak creditworthiness relative to other domestic issuers, says the agency. Ford Mexico’s short-term rating indicates that the issuer has a below average ability to repay short-term senior unsecured debt, it adds.
Pacific Rubiales Lures Buyers for 2016
Canada-based oil and gas company Pacific Rubiales, which operates in Colombia, is preparing to sell $400m in 2016 bonds. The plans follow reverse inquiry on a “non-deal” roadshow in late September, bankers on the deal say, and the bond is expected to price Thursday. The new notes amortize equally in years 5, 6 and 7, for an average life of approximately 6 years. BofA-Merrill Lynch and Citi are managing the sale, rated BB minus/B+ and guaranteed by Rubiales Holding and various subsidiaries. Rubiales plans to use proceeds for general corporate purposes and to repay a 4-year $250m loan provided in May by BNP Paribas, Calyon, Banco Davivienda and WestLB, paying Libor plus 550bp. The issuer also announced this week that it increased its 2010 capex budget by $394m to $853m after successfully ramping up production at the Rubiales and Piriri fields, exploration success at the Quifa block and opening of the ODL pipeline. Fitch notes the issuer’s strong liquidity position, as well as leadership position as the largest independent oil and gas player in Colombia and strong management with recognized expertise in heavy oil exploration and production. Risks include sustained adjusted leverage above 3x and/or production and reserve declines.
Pacific Rubiales Boosts Colombia Capex
Canada-based oil and gas company Pacific Rubiales, which operates in Colombia, has increased its 2010 capex budget by $394m to $853m after successfully ramping up production at the Rubiales and Piriri fields, exploration success at the Quifa block and the opening of the ODL pipeline. The new budget is $471m higher than that of 2009, the company says. The higher capex, the company adds, will allow it to double production, after royalties, to 92,000 barrels of oil equivalent per day (boepd) by the end of 2010 from the an estimated year-end 2009 production of 46,000 boepd. The company is financing its 2010 capital plan from operating cashflow and from the early exercise of its warrants which, if exercised in full, would result in net proceeds to the company of approximately $275m, after payment of incentive fees.
Jamaica Downgrade May Not Trigger Sell-Off
S&P chopped Jamaica’s ratings by another notch to CCC with negative outlook after the central bank governor resigned, but JPMorgan analyst Neeraj Arora does not think this will trigger a bond market sell-off. “Since Jamaica’s USD bonds are held mostly by local investors – who appear to have taken a more benign view of the resignation – an aggressive sell-off of the bonds is unlikely, especially given their already relatively depressed levels,” he writes in a report. He adds says that the resignation of central bank governor Derick Latibeaudiere, who was the lead negotiator for a possible standby facility from the IMF, “is negative and could result in some knee-jerk selling pressure on the Jamaican dollar.” Meanwhile, S&P says a negative outlook signals the growing risk of a debt exchange operation that could be deemed an event of selective default. August 5 it downgraded Jamaica’s ratings to CCC+ with a negative outlook, highlighting the country’s severe fiscal situation as well as vulnerabilities in the government’s debt profile. “Since then, the government’s room to maneuver continues to narrow as it becomes increasingly difficult to further cut public expenditures – as reflected, in part, in the recently amended budget – in order to sustain an interest burden of about 60% of general government revenue,” said S&P credit analyst Roberto Sifon Arevalo. The IMF is in Jamaica having meetings regarding a possible standby agreement.
Spanish PE Shop Buys Mexico Hotel
Chicago-based real estate investment trust Strategic Hotels has sold its 240-room Four Seasons hotel in Mexico City to Barcelona-based private equity shop Meridia Capital for $54m. According to the seller, the deal value is about 13.8x 2009 Ebitda, which it deems “an attractive price in an extremely difficult environment,” given the impact of the swine flu virus on the country. The buyer, which owns hotel properties in Santiago, Sao Paulo and Mexico City as well as in Asia and Europe, paid for the Mexico hotel with equity from its Meridia Capital Hospitality I fund, which closed in 2007 with EUR150m.
Desmet to Restructure at Big Discount
Mexican housing developer Desarolladora Metropolitana (Desmet) is close to putting together a proposal to restructure $260m in unsecured dollar bonds, according to executives involved in the process. Terms have yet to be decided on, but initial discussions appear to have yielded a general consensus that the new deal will involve a “significant” haircut on principal, as well as some equity upside to existing holders that participate in the workout, says an executive close to Desmet. One estimate from a buysider off the trade is that the deal will involve an NPV loss of well over 50%. Investors and bankers involved decline to specify a figure, but suggest the figure is not farfetched. The company’s 2017 10.75% notes, of which there is $200m outstanding, are indicated in the 12-15 cents range. The transaction would involve an exchange for new notes with a different coupon and presumably an extension of final tenor. In 2008, Desmet posted Ebitda of around $5m on revenue of $40m, says an executive close to the homebuilder. Holders have hired Cleary Gottlieb to advise on the restructuring. Heritage Capital Latin America is advising Desmet, while Dewey & LeBoeuf is providing legal counsel. Tudor, the hedge fund, is understood to be a leading holder of the debt, says an investor not involved.