Tennessee-based Noranda Aluminum has acquired the 50% stake it did not own in Jamaica’s St. Ann Bauxite company from Century Aluminum, its stressed joint venture partner in the company. In Q2, Century recorded a $35m impairment charge related to its equity-method investment in St. Ann, which Noranda agreed to acquire from the company, plus an small premium, Noranda CFO Robert Mahoney tells LatinFinance. “There was modest consideration, primarily surrounding the release of Century from future obligations and liabilities,” he says. No financial advisors were involved in deal.
Category: Regions
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EPM Seeking New A/B Loan
Colombia’s Empresas Publicas de Medellin (EPM) is looking to raise at least $200m through an IFC A/B loan, say people familiar with the matter. Company officials say the terms are still being negotiated, while bankers away from the process suggest the deal has already been floated around to the market. The company is heard seeking a tenor of 5 years for the syndicated or clubbed B portion at a rate at Libor plus 350bp. The IFC may finance up to 15% of the $200m, or put in a $30m ticket, possibly at a tenor longer than 5 years, says a banker. The proceeds are destined for EPM’s many public infrastructure projects, including its Sogamoso hydropower dam project.
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Peru Group Readies Leverage Push
Peru’s Grupo Brescia, by far the country’s largest holding company, is heard to be taking its first steps to access the debt markets. The group, which owns significant stakes in 52 companies in South America, including Peru’s largest fishery, its largest tin mine, and a minority state in BBVA Continental, has no outstanding debt or equity securities in Peru or abroad. Last week it acquired Lafarge’s Chilean cement unit for $555m. It may use the acquisition as an opportunity put some debt on its balance sheet in a departure from its historical strategy of paying for all of its purchases with cash, according to bankers following the company. “This is a big opportunity for the banks,” says one Andean region banker. Celfin Capital, which advised Brescia on its acquisition of Lafarge, is heard to have arranged for BancoEstado to provide the group with a $180m 2-year loan, which would then be taken out in the Chilean bond market, say local bankers away from the proposal. High quality corporate names have issued at up to 20 years in Chile. Brescia is heard to still be entertaining pitches from banks as to what to do with its balance sheet and new acquisition financing. It has apparently already paid for the Lafarge asset in cash, but could still choose to raise debt in its place. Brescia, whose investments are controlled by its AESA unit, is said to be hiring finance executives to prepare for a more active financial management of its assets. A Brescia spokesman didn’t return calls seeking comment.
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Moody’s Reaffirms Mexico Sovereign
Moody’s has delivered a generally favorable review of Mexico’s sovereign credit, reaffirming its Baa1 rating and keeping the outlook at stable. The market reacted faintly to the news, with spreads on 10-year TIIE and 5-year CDS coming in a few basis points Wednesday, while MXP-BRL tightened more visibly, according to RBS analysts. The shop’s analyst Siobhan Morden says in a report she does not expect a continuation of asset strengthening based purely on the agency’s move, noting the credit and related assets have already rallied in recent weeks. In the near term, however, the MXP may still benefit as it catches up to the rest of the region’s currencies, she notes. “Rather than pay attention to single events, we will focus on the ability of the administration and the willingness of Mexico’s political class to make substantive progress on pending issues going forward, without conditioning ratings changes on any specific measure or deadline,” writes Mauro Leos, and senior credit officer at Moody’s. RBS analysts say they are surprised by the timing of the decision by Moody’s, given that Mexico is set to begin a critical discussion on fiscal reform in the country. With prospects of reform dim, structural fiscal constraints are likely to remain, they say, concluding that Moody’s’ view is probably based on the expectation of a cyclical recovery, rather than improvement in the fiscal and growth dynamics. In July, Fitch said it would keep its BBB+ rating for Mexico unchanged, citing strong macroeconomic policy framework, well-entrenched macroeconomic stability, and healthy external finances. Meanwhile, Morgan Stanley says that the consumer confidence in Mexico appears to have bottomed out following a sharp decline to record-low levels in May driven by the flu outbreak. It also says that economic conditions are improving, with the pace of job losses moderating, inflation declining and sectors affected by flu-related disruptions normalizing to a great extent.
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Isagen Primes COP Tap
Colombia’s Isagen is preparing to sell COP850bn ($427m) in bonds in Colombia’s local market, contributing what appears to be an active pipeline. The transaction, rated AA+ on a national scale, is expected in the first week of September, according to a banker managing it. The generation unit of ISA can choose to issue 1 to 20-year bonds paying fixed rates, or interest set to the DTF benchmark or IPC inflation index, resepectively. The issue is to be Isagen’s first in the domestic market, though ISA has sold before, most recently offering COP210bn in 2015 and 2018 bonds in April. Isagen plans to raise a total of $600m by issuing bonds locally and externally to help finance a $1.4bn hydroelectric project, with multilateral debt also being considered. It has hired Santander to place the upcoming deal. Other issuers readying new local bonds for August or September sales, include Grupo Nacional de Chocolates, Avianca, Titularizadora Colombiana, Bancoldex, and Finadater, according to brokers.
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Mexico Telecom Serves up Juicy New Issue
Mexico’s Alestra has sold $200m in 11.75% 2014 bonds, the first part of a two-step plan to roll over 2010 bond maturities. The bonds were heard trading up 3.0-3.5 points in the gray market at close Wednesday. “It’s expected that you will leave a little on the table for the lower-rated credits,” says a participating New York EM investor, noting that the pricing is appropriate. The deal is part of a stream of new low-rated LatAm issuers taking advantage of a strong bid for EM credit. The business services and telecom provider, priced the new notes at par to yield 11.75%, coming at the tight end of the 12% area guidance given Tuesday. Orders for the B1/B+/BB minus sale reached $750m, according to bankers on the transaction. Alestra’s apparent success yesterday is a good sign for Mexican high-yield credits, say bankers away from the deal, particularly after compatriot Javer’s $180m 13% 2014 priced last week fell short of the targeted $200m and traded down slightly after issue. The telecom jointly owned by Grupo Alfa and AT&T plans to use proceeds to fund a $193m buyback for its 8% of 2010 amortizing bonds, currently being weighed by holders. Alestra is offering to buy them back at 101.25 by Friday’s early deadline, and at 101.00 through August 14. Citi is leading the two part process with Morgan Stanley as joint bookrunner. The issue follows Cosan’s $350m BB minus bond which saw a book of nearly $2bn Tuesday. Mexico’s Petrotemex will look to keep the trend going next week with a $200m BB+ offer through Bank of America-Merrill Lynch and JPMorgan. In the high-grade space, a benchmark 2019 from Petrotrin, via JPMorgan and Credit Suisse should close out LatAm issuance until September, when several new deals are heard waiting in the wings.
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Alestra on Deck to Price
Mexico’s Alestra has indicated guidance for its new 2014 bond in the 12% area yield, according to investors, and the deal will be priced as soon as today. The order book was heard at north of $600m late Tuesday, investors say, adding that the issue could be increased to $250m from $200m. The B+/BB minus deal is part of a two part transaction to roll over some $200m in debt due next year. The telecom jointly owned by Grupo Alfa and AT&T is also running an offer expiring Friday to buy back $193m in 8% 2010 amortizing bonds. Citi is leading with Morgan Stanley as joint bookrunner.
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Peru Seen Cutting Rate to 1.50%
Peru will cut its monetary policy rate by 50bp to 1.50% in its August 6 meeting, following a 100bp cut to 2.0% in July, according to a Morgan Stanley forecast. “At the last meeting the authorities signaled the end of aggressive interest rate cuts, but with accumulated inflation in the first seven months of the year at 0.21% on the back of three months of sequential price declines … inflation data remains supportive of further policy easing,” the shop says. It expects the rate to drop to 1.25% by the end of the year. Bank of America Merrill Lynch also sees the rate dropping to 1.50% this week and then rising to 3.50% in 2010.
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BBVA Colombia Set for Bond Sale
BBVA’s Colombian unit plans to sell today up to COP198bn ($98.7m) in bonds in the domestic market. The bank can offer fixed-rate bonds at 3, 5 and 10-year maturities; 3 and 5-year notes paying interest linked to the DTF benchmark, and also 5 and 10-year bonds paying interest linked to the inflation index. BBVA’s own local capital markets unit is coordinating the transaction, rated AAA on a national scale. The sale is the second from a COP500bn program, and follows a placement of COP301.9bn done in August 2008.
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Alfa’s Petrotemex Tries Bond Luck
Mexican petrochemicals producer Petrotemex is set to begin tomorrow a US and European road show supporting a new $200m 2014 bond. The issue will be Petrotemex’s first in the public cross-border market, though it has $75m outstanding in privately issued 2012 notes. The unit of conglomerate Grupo Alfa is raising the funds to take out existing debt. Investor meetings are scheduled for Wednesday in New York, Thursday in Boston, Friday in Los Angeles and will finish Monday in London. Bank of America-Merrill Lynch and JPMorgan are managing the transaction. The manufacturer of chemical products used in making polyester will look to follow high-yield compatriots Javer, which sold $180m in debut 2014s last week, and Alestra, which is expected to print $200m in 2014s as soon as Friday. Fitch has rated the issue BB+, noting the offering should mitigate refinancing or short-term liquidity risk and allow the company to rebalance its debt maturity profile. Petrotemex had approximately $624m of total debt as of June 30, Fitch says, including $308m in syndicated bank loans. It raised a $150m 5-year dual currency loan in December 2007, led by Santander and Standard Chartered. The facility stipulates that the margin over Libor/TIIE should be 45bp and 55bp, respectively, for a leverage ratio of 2.5x-3.0x. Using the $624m in total debt the on the company’s balance sheet and its trailing 12-month Ebitda through June 30 of $243m, the company’s leverage ratio stands at just over 2.5x.