The government of the Colombian state of Cartagena has signed a COP120.5bn ($58m) syndicated loan to support its 2009-2011 tourism development plan. The 7-year facility will a pay an interest rate of the DTF benchmark plus 3.5%, reached through an auction process usually seen in the bond markets. “We’ve set a new standard for municipal financing in the bank market,” says Julio Torres, partner at boutique investment bank Nexus, which arranged the transaction. Torres says that oversubscription on the deal enabled the rate to be brought down from an initial DTF plus 4.0%. Bancolombia, Banco de Occidente, Banco Popular, BBVA Colombia and Banco GNB Sudameris participated, though Torres declines to indicate the size of individual allocations.
Category: Regions
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Peru to Keep Rate Unchanged
Peru’s central bank is expected to keep its monetary policy rate unchanged at 1.25% today. It has already cut 525bp so far this year, Morgan Stanley says, adding that annual inflation has slipped below the 2.00% target to 1.90% in August. Bulltick Capital says it expects a pause in the September meeting after a 75bp cut in August to see how the economy reacts to the rate cuts, the improving global environment and implementation of the fiscal stimulus. It adds there is a possibility of one more 25bp cut to bring the rate to 1.00% by year-end.
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Andean Exchanges Coagulate
The stock exchanges of Peru, Chile and Colombia have agreed to discuss the integration their equity markets in a bid to increase their relevance amidst consolidation of liquidity in the region and a looming threat from the BM&FBovespa, which has become among the largest exchanges by market cap globally. The Andean bourses pledge to remain independent entities with separate platforms and rules governing listing and clearing, but will allow issuers of partner exchanges to list shares on their domestic platform, thereby increasing companies’ access to regional investors. “The exchanges’ strategic objective is to increase the liquidity of their markets over time,” says Roberto Hoyle, president of the Lima exchange, in a statement. He adds that later on, the exchanges’ fixed income markets would also be integrated.
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Geo Joins High Yield Pipeline
Mexico’s Corporacion GEO plans to sell 5-year bonds, and is set to begin investor meetings next week. The homebuilder plans to offer up to $200m, according to a Fitch report, which assigns a BB minus rating. A two team road show will begin Sept 14 in Singapore and London, and visit Hong Kong, New York, Switzerland and Boston before finishing in Los Angeles September 17. A deal is expected to follow shortly after. Proceeds from the issuance will be used to refinance current debt as well as for working capital needs, says Fitch. Morgan Stanley and Santander are managing the sale. While Geo maintains a dominant market position in a fragmented sector, Fitch says, there is refinancing risk, with short-term debt representing 69% of total debt. The homebuilder can find encouragement in its comparables: Urbi’s (BB/Ba3) 2016 is trading to yield 8.9% at the bid, and Homex’s 2015 is trading to yield an 8.5% bid, according to one sellside trader. Fellow homebuilder Javer’s $180m 2014 bond sold in July is trading back up around 98 on the bid side, according to a trader, after being down as low as 95.
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Fitch Upgrades Bolivia on Macro Stability
Fitch has upgraded Bolivia’s rating to B from B minus. The outlook is stable. The upgrade reflects favorable public and external debt ratios and the maintenance of macroeconomic stability in the context of political and social turbulence and an unfavorable external environment, says Fitch. “Bolivia’s fiscal policy response to the global economic crisis has taken the form of continued expenditure expansion and higher public investment,” notes the agency in a report. “However, the effectiveness of this fiscal stimulus is hindered by weak execution capacity.” Fitch says it expects a near balanced position for fiscal accounts in 2009. “Higher expenditures combined with lower revenues and more difficult financing conditions could increase fiscal pressures over the forecast horizon. In spite of expected fiscal slippage, Bolivia’s fiscal indicators will remain robust relative to B peers,” says the agency. It expects real GDP growth to decelerate to 1.6% in 2009 in response to the less favorable external environment before recovering to 2.8% in 2010 with some support from informal economic activity.
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CME Approaches Bolsa
The Mexican Bolsa and the Chicago Mercantile Exchange (CME) are in talks to set up an agreement whereby the CME would acquire a minority stake in the Bolsa, says the Mexican exchange. The move appears to mark the beginning of a second major foray into the region by the CME, which in February 2008 exchanged 2.13% of its equity for a 10% stake in the BM&F. That stake, which was diluted to 5% following the merger of the BM&F and the Bovespa, formed the underpinnings of a series of pacts that allow the two exchanges to cross-list their products. This in turn has allowed users of each platform direct access to exchange-traded instruments in new jurisdictions, a change that is expected to boost volumes significantly for the Brazilian exchange in the coming years as US traders and users of the CME’s platform seek out LatAm risk. No additional details regarding the CME-Bolsa talks were divulged and representatives of each decline to comment further.
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Bogota Transport Brings Debt Part II
A trust managing the finances of Bogota public transportation system Transmilenio has sold COP323bn ($162m) in domestic bonds denominated in the UVR unit. The issuer placed COP63bn-equivalent in 2013 bonds at a fixed interest rate of 4.93%, COP87bn-equivalent in 2016s at 5.95%, and COP173bn-equivalent in 2017s at 6.18%. Demand reached COP411bn, according to a regulatory filing. The debt is securitized by future payments to the system budgeted by the federal and city governments. Proceeds from the sale will partly finance construction of 14km of roads connecting the existing bus system with Bogota’s main airport and a 7.7km extension of the network in downtown Bogota. Citivalores and Alianza Valores managed the sale, rated AAA on a national scale. The issue is the second of 4 planned ABS deals through February 2010, expected to total COP1.4trn. In June, Transmilenio sold COP263bn in UVR and peso-denominated bonds.
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Axtel Rings Refi Bond
Following the launch of a tender offer for existing debt last week, Mexico’s Axtel plans to begin roadshowing Thursday a new high-yield bond. The fixed-line telecom is set to choose between a 2019 NC5 or 2016 NC4, according to the term sheet. Size is expected to reach up to $300m, according to a Moody’s report, which assigns the issue a Ba2 rating. A Thursday lunch will kick off two days of New York presentations followed by meetings in London on Monday, September 15, and in Boston and on the West Coast on the 16th. Proceeds in excess of the repayment of the 2013 notes it is tendering will be used for general corporate purposes and partial repayment of a 2012 term loan. The new bonds include a change of control put option at 101, and among the covenants is a consolidated leverage ratio of less than 4x. Credit Suisse and Bank of America-Merrill Lynch are managing the sale. Last week, Axtel launched a cash tender offer for any and all of its outstanding 11.00% senior notes due 2013, offering 105.75% of the principal including a consent payment equal to 3.00%. The tender, being managed by Credit Suisse, closes September 30. Issuers including Petrotemex, Alestra and Javer are among the Mexican high-yield names that have taken advantage of offering conditions in July and August.
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Cemex Kicks Off Jumbo Equity Deal
Cemex plans to issue as much as $1.8bn in the form of ADS later this month, according to its most recently filed offering documents. The Mexican cement giant says it will offer 1.2bn ordinary participation certificates (CPO), which is equivalent to 120m ADS. With ADS closing at $13.02 Tuesday just prior to the deal’s announcement, the offering could be worth $1.56bn, with an additional 15% greenshoe elevating the offering to a potential $1.8bn using yesterday’s levels. The company is set to embark on a global roadshow next week, say bankers on the deal, which expect a pricing in the last week of September. Each CPO represents two series A common stock and one series B common stock. An ADS represents 10 CPOs. Three quarters of the offering will be made to overseas holders, with the remainder being placed locally. The lineup of banks running the deal, which is being forced upon the company by a massive bank debt refinancing agreement closed in August, includes expected names from Cemex’s leading 6 lenders, like Citi, Santander and BBVA, as well as the surprise appearance of JPMorgan on the left of the lineup of underwriters. The shop was not among Cemex’s top lenders. JPMorgan, Citi and Santander are joint lead bookrunning managers, and are joined by BBVA on the global coordinator tier. BBVA, BNP Paribas, HSBC and RBS, all three among the company’s senior lenders, are also joint bookrunners, but a level below the top three, while BofA Merrill, Barclays, Calyon, ING, Lazard and Scotia occupy the bottom rung, in descending order.
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Jamaica Gets WB Aid
The World Bank has approved a $15m loan to Jamaica to help it reduce poverty in rural areas and improve market access to small-scale farmers and tourism service providers. The loan has a variable spread and is payable in 30 years, including a 5.5-year grace period with equal repayments of principal.