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.
Category: Regions
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.
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.
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.
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.
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.
Argos Snaps Up Holcim Assets
Colombia’s Cementos Argos has acquired Holcim’s assets in Panama, the Dominican Republic, Haiti, St. Thomas, St. Maarten, Antigua and Dominica for $157m in cash, says Ricardo Sierra, Argos’ finance vice president. “We don’t require financing. We had already raised enough cash through divestments made early this year,” the official tells LatinFinance. He adds that the deal was handled in-house and that no external advisors were involved on its part. The price Argos is paying represents about 1.6x net 2008 sales. Holcim says that the assets had net sales of $98.4m in 2008. Tobias Woerner, an analyst at London-based MF Global says that what Argos is paying is “reasonable.” He adds that when Cemex sold its Australian assets to Holcim, the buyer paid 1.1x net sales. The deal marks the second time in only a week that a LatAm-based company has snapped up assets from a retreating foreign competitor, a trend that LatAm M&A specialists expect to continue. Last week, France’s Lafarge sold its Chilean cement, aggregates and concrete assets to Peru’s Brescia Group for $555m enterprise value, equal to 7.4x 2008 Ebitda. Chile-based analysts say the price paid for the package 84% owned by Lafarge Chile was fair to cheap.
T&T Oil Hits the Road
A long-awaited benchmark issue from Petroleum Co of Trinidad & Tobago (Petrotrin) appears to be on the way before the summer hiatus. The state-owned integrated oil company plans to begin a roadshow Wednesday in London that will hit the eastern US Thursday and Friday before finishing Monday in Los Angeles. It should be followed by a 144a/Reg S 2019 of “benchmark” size, likely $400m-$800m. Proceeds will fund construction of a gasoline optimization facility and ultra-low sulfur diesel plant that is a part of its clean energy program. Petrotrin’s outstanding 2022s were seen trading to yield a low 9% handle. As the bonds have an average life of 7-8 years, a yield of high 9%-low 10% area is expected on the new deal. The issuer will hope to generate the robust demand that fellow state-owned oil companies Ecopetrol, Petrobras and Pemex have enjoyed for their issues. But it will have to overcome negativity surrounding last week’s 1-notch downgrades to BBB and Baa3 by S&P and Moody’s, respectively. The agencies cut Friday, citing a weakening financial profile due to increased leverage and lower oil prices. “Petrotrin’s debt levels are expected to remain elevated over the next several years with no material deleveraging until 2012,” says Moody’s, which expects the sovereign to support the issuer. Credit Suisse and JPMorgan, winners of an RFP process earlier this year, are managing the new bond issue. LatAm issuance on tap for this week includes a $300m 2014 from Brazil’s Cosan as soon as today, and Mexico’s Alestra, with a $200m 2014 expected on Friday. Cosan is expected to yield around 10% and Alestra 11%-12%, say investors.
Guatemala Gets WB Financing
The World Bank has approved a $350m loan to Guatemala to help the country improve its fiscal and institutional policies and mitigate the impact of global crisis. The loan has a maturity period of 26.5 years, including a grace period of 8.5 years. JPMorgan says it sees little downside risk for Guatemala in getting the loan, as the country has relatively low public debt levels, which stand at about 18.1% of 2008 GDP.
Moody’s Negative on Bolivia Banks
Moody’s says that even though Bolivia’s banking system is stronger than it was 10 years ago, it may still feel the sting of the global slowdown, which could undermine fundamentals in the medium term. “We expect bank profits will shrink because of Bolivia’s weakened export prices and declining business volumes; interest rate margins will also be squeezed as the competition to attract customer deposits increases,” Moody’s VP Maria Andrea Manavella says. She expects the ratings of the banks to remain generally stable. Moody’s ratings for the Bolivian banks, as reflected by the average bank financial strength rating of D minus, fall beneath the LatAm weighted-average of C. However, Manavella says this is because they are primarily capped by the agency’s low country ceilings for Bolivia, as well as by the still high, although declining, level of financial dollarization – both on assets and deposits – which may affect the banks’ financial condition.