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.
Category: Regions
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.
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.
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.
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.
Cemex Plots Equity Sale
Cemex has approved the issue up to 1.6bn CPO shares through either a public share offer or via a sale of convertible bonds. The troubled Mexican cement maker is raising capital to comply with the terms of its recent $15bn restructuring, in which it faces higher spreads if it does not raise $1bn in equity by June 2010. Cemex does not state how much it expects to raise, but a sale of 1.6bn CPOs would raise just over $2bn, at Monday’s closing price of MXP17.08. The company does not indicate who would manage the sale or when it would take place. In August, Cemex finalized a workout that terms out shorter maturities to 2014. The interest on the new debt of Libor plus 450bp can increase if Cemex does not meet a strict debt repayment schedule. This includes raising $1bn in equity by next June to meet 2010 amortizations of more than $2.2bn if it hopes to avoid a $100m fine and a 75bp margin increase. Equity desks with an array of financing options have aggressively pitched Cemex, say bankers close to the issuer. Citi and Santander are among two of the company’s leading lenders, and they appear best positioned to gain lead roles on an upcoming issue.
Sponsors Wind up Wind Financings
Renewable energy sponsors EDFEN and Mesoamerica Globeleq are gunning for a combined $470m in multilateral financing by year-end to build 2 separate turbines in Mexico and Honduras. In the first case, EDFEN, the renewables arm of France’s EDF, is seeking $200m from US Exim Bank, the IDB and the IFC to build at 68MW generator called La Ventosa in Mexico. Wal-Mart de Mexico will be purchasing the power generated by the unit. The funds are heard coming at 10-years or longer, says an executive close to the process, while pricing on the facility is still being negotiated. Meanwhile, Mesoamerica Globeleq, is seeking $270m in similarly long-dated funds for its Cerro Hula project in Tegucigalpa. US Exim is solely leading that transaction. The offtaker in this case is ENEE, the national energy board. “Financing is being done with [multilaterals] because of what’s going on in the commercial bank market,” says a banker eyeing the deals. Long-dated tenors are today nearly impossible for exotic project financings. Multilaterals, meanwhile, can dish out funds for these projects at below market rates thanks to a lower cost of funds and the developmental agenda. Closings are expected by year-end, says the banker. US Exim has hired NordLB to advise it on the transactions.
Axtel Rings 2013 Notes
Mexican fixed-line telecom Axtel has kicked off a cash tender offer for any and all of its outstanding 11% senior notes due 2013, along with a consent solicitation to amend the indenture governing. The issuer is offering 105.75% of the principal including a consent payment equal to 3.0%. Holders will also receive accrued and unpaid interest. There is approximately $162.5m aggregate principal of the notes outstanding and the consent solicitation expires September 16 while the tender offer closes September 30.
Credit Suisse is dealer manager.
Telmex International Places MXP5bn Local Bond
Telmex International has raised MXP5bn in its first domestic bond offer, the top end of a MXP3bn-MXP5bn expected range. The unit spun off last year from Telmex priced the 3-year floating-rate bonds at TIIE plus 135bp. The issue was 1.5x subscribed, according to a banker managing the sale. Proceeds are to be used for general corporate purposes, which may include refinancing debt. BBVA and Inbursa managed the deal, rated AA on a national scale. The issue is the first sizeable corporate offering since the original Telmex sold MXP4bn in July.
T&T Seen Cutting Rates Further
Trinidad & Tobago’s central bank recently cut its repo rate by 50bp to 6.75% in reaction to a drop in inflation, which is down at 5.9% in July from a peak of 15.4% in October, and a slowdown in domestic demand. JPMorgan expects the bank, which has reduced the rate by 200bp since March, to continue easing, amid decelerating inflation and a weak domestic economy. The shop forecasts GDP will shrink 1.0% this year. The next repo rate announcement will be on September 25.