Mexico’s CFE has sold MXP2.6bn in 2024 UDI-denominated bonds on the domestic market. The notes with a 7.5-year average life priced at 5.04%, or 155bp wide of the corresponding UDIbono. The issuer was targeting up to MXP2.75bn, according to a banker managing the sale, but elected to issue MXP2.6bn to achieve a tighter spread than what was available at a higher volume. Total demand for the deal reached MXP3.6bn, says a banker on the trade. Proceeds will go into a trust funding capex projects. The deal is the second such transaction, following MXP3.42bn in 2019s in August. ING managed the sale, rated AAA on a national scale.
Category: Regions
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Ecopetrol JV Sells Local Bond
Colombian oil pipeline operator Oleoducto de Los Llanos Orientales sold COP500bn ($260m) in inflation-linked bonds on the local market. The 2016 notes pay interest at the IPC inflation index plus 4.88%. The COP500bn total includes a COP50bn overallotment option, as the issue received COP719bn in demand, according to a brokerage managing the sale. ODL plans to use the proceeds to finance construction of its 235km pipeline and return part of the investments to its two owners Ecopetrol (65%) and Canada’s Pacific Rubiales (35%). ODL began transporting oil extracted from the Pacific Rubiales field, also jointly owned by Ecopetrol and Pacific Rubiales, in September. Corficolombiana structured and managed the transaction, rated AAA on a national scale.
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LatAm Recession Bottoming Out: S&P
LatAm will see GDP contract by 2.3% in 2009, its sharpest drop in decades, but is expected to grow 3.0% in 2010, S&P says. Mexican GDP is expected to shrink 7.5% in 2009, the sharpest drop in the region, and to rebound 2.5% in 2010. Panama and Peru likely will post the highest growth rates in the region, at 2.3% and 2.0%, respectively, though these numbers are down significantly from the 9.0%-11.0% increases in 2007-2008. In 2010 Panama is expected to expand by 4.5% and Peru 4.0%. S&P believes Brazil will see no growth in 2009, but expand by
4.0% in 2010.
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Brookfield, AC Capitales to Manage Peru Fund
The Peruvian government says it has selected Canada’s Brookfield Asset Management and locally owned AC Capitales to manage an infrastructure-focused private equity fund that aims to raise $500m. Brookfield and AC Capitales have committed $100m to the vehicle, says a Brookfield spokesman. Additional commitments are expected from the IDB and CAF. A first close, say the fund managers, is expected in early 2010.
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Colpatria Jumps Back into Pension Fund Sector
Colombian conglomerate Colpatria has jumped back into the country’s pension fund sector by acquiring Colfondos, the country’s fourth largest pension fund, from Citi. Chile-based private equity shop Linzor Capital, and New York-based Palmfund Management partnered with Colpatria in the acquisition. Jose Restrepo, an equities analyst with Interbolsa who covers the sector, estimates the buyers could have paid between $275m and $320m for Colfondos, which has $5.6bn in assets under management. Colfondos’ net assets add up to about $100m. Restrepo believes the acquisition is positive for Colpatria, as it enhances the company’s diversification. Colpatria, which owns companies in sectors ranging from construction to banking, had sold its pension fund business 10 years ago to BBVA. That business became known as BBVA Horizonte and is the third largest pension fund in Colombia. Linzor Capital declines to comment on the transaction, which is subject to regulatory approval, and the other buyers of Colfondos did not return calls for comment.
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Emgesa to Issue Short-Term Bonds
Power utility Emgesa says it is planning to issue COP600bn, about $315m, in COP-denominated bonds over the next 2 years. The bonds will be issued in four series, up to 1-year in duration. Series A will have a maximum variable rate of 15% over DTF, Series B will have a maximum variable rate of 15% over IPC, Series C will have a fixed rate of 20%, and Series D will have a maximum variable rate of 15% over IBR. Proceeds will be used to optimize the cost of the company’s debt by replacing its current debt with debt with cheaper rates. Emgesa expects Fitch to rate the bond issue F1+. Bookrunners for the issuance are still to be selected.
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Infonavit Sells MXP2.7bn RMBS
Mexico’s Infonavit has sold MXP2.68bn in mortgage-backed bonds denominated in the UDI inflation-linked unit. The 2031 notes priced at a fixed rate of 5.5%, 12bp lower, it says, than a similarly-structured MXP1.5bn August issue. Demand reached MXP3.7bn, Infonavit says, for the issue rated AAA on a national scale. The federally-funded home lender has now sold MXP8.7bn of its MXP10bn target for 2009. Banamex and HSBC led.
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Pemex Reopens Euros for Borrowers
Pemex pounced on attractive relative pricing in Europe Wednesday with a tightly priced EUR1bn 2017 issue, the first non-sovereign public deal from LatAm in that currency since 2005. The sale targeting European investors priced at 99.311 with a 5.500% coupon to yield 5.623%, or mid-swaps plus 250bp, following 255bp area guidance. Demand reached EUR2.6bn, according to bankers managing the Baa1/BBB+/BBB sale, who note participation from more than 270 accounts. “LatAm Euro-denominated issue has generally traded wide to dollars over the last few years. We began to see that relationship reverse about 5 weeks ago,” explains a banker on the deal, who estimates that the new bond priced 5bp-10bp through dollars. He adds that the transaction reopens the euro market for other high quality LatAm names with a reputation in Europe. “It’s flat to the dollar curve and very competitive,” says a banker at a competing shop. “It opens up a benchmark that might be followed,” he adds. The deal is the first Euro-denominated LatAm quasi sovereign since Pemex’s EUR1bn 2025 issue in 2005, according to Dealogic. It is the first from LatAm since a Brazil sovereign euro issue in early 2006. Deutsche Bank and Calyon managed this week’s sale. The state-owned oil producer appears eager to raise cash anywhere it sees liquidity, in order to cover an $18.6bn 2010 capex budget. Pemex sold $1.5bn in 2015s September 10 to yield 5.033%, followed by a CHF350m 2014 deal to yield 3.525%. It was in China last week, apparently seeking new sources of funding. This year has also featured an August EUR200m private placement of 5.779% 2017s from Pemex, as well as a GBP350m sale of 8.25% 2022s in May.
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Peru on Path to High Grade
Moody’s has placed Peru’s Ba1 bond rating on review for possible upgrade to reflect the sovereign’s track record of stable economic policymaking and reduced risks from the economy’s relatively high degree of dollarization. “The review reflects signs of increased shock-absorption capacity in the face of adverse external conditions,” said Mauro Leos, regional credit officer for LatAm. “The government’s enhanced policy flexibility is also evidenced by its successfully steering of the economy towards a ‘soft-landing’ after a period of above-trend growth,” he adds. The country’s Baa3/P-3 country ceilings for long- and short-term foreign currency debt and its Ba2 country ceiling for foreign currency deposits were also placed on review for possible upgrade. Moody’s last week upgraded Brazil to Baa3 from Ba1.
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Veteran Mexico Economist Retires
Alfredo Thorne, Mexico chief economist for JPMorgan for the past 14 years is retiring and moving to his native Lima, confirms Gabriel Casillas, who is taking Thorne’s place. Casillas, who was previously with UBS and has been at JPMorgan 1 week, says that Thorne’s last official day with JPMorgan is today.