Colombia’s Banco Colpatria has authorized the bank to sell up to COP600bn through its domestic bond program, it says, up from COP400m. The bank announced plans to sell up to COP400m earlier this year, but has yet to indicate when it plans to sell the notes or any further details.
Category: Regions
Posted inDaily Brief
Colombia Bond Feeding Frenzy Continues
Investors’ hearty appetite for Colombian credit shows no sign of waning, with Empresas Publicas de Medellin (EPM) getting more than $6.5bn in orders for a of $500m in 2019 bonds. The municipally owned Colombian utility priced at 98.292 with a 7.625% coupon to yield 7.875%, or UST+432.5bp, the tight end of price guidance. Investors and analysts had expected at least 8% for the first-time issuer. The yield is about 140bp-145bp wide of the sovereign, and follows Ecopetrol’s 2019 bond which last week priced about 100bp over Colombia, at UST+410bp, and garnered $9bn in demand. Bankers away from the deal say the pickup to the sovereign is within an acceptable range of 125bp-150bp. “I think we came at the right price. The market has been very good in the last week,” EPM CFO Oscar Herrera tells LatinFinance. He notes that DCM should remain open for other corporates. Despite extraordinary demand, Herrera says EPM could not have upsized without additional government approval. He adds that a pickup of 142bp to the sovereign is appropriate for a debut issuer. The bond was trading up 1.5-2.0 points in the gray, according to investors, who expect it to rally further. “I see about 40bp in it, so I think it might still have a way to go,” says a participating EM investor. Some 250 accounts came in, according to bankers on the transaction, with about $2.40bn from the US, $1.80bn from Colombian accounts, and $1.25bn from Europeans. JPMorgan and Bank of America-Merrill Lynch managed the sale, rated Baa3/BB+. Proceeds will help fund the utility’s ambitious growth plans, which include international expansion.
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Telmex Internacional Plans Domestic Issue
Telmex Internacional has filed for a floating-rate bond sale of up to MXP5bn in Mexico’s domestic market. It does not specify tenor on the bond, rated AA on a national scale. Inbursa is managing the transaction, the first long-term placement from a MXP10bn shelf. The unit of Telmex – housing non-Mexico LatAm business and the Mexican yellow pages business – plans to use proceeds for general corporate purposes, including refinancing debt. Telmex Internacional was spun off from Telmex in June of 2008 and listed in Mexico and the US.
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EPM Set to Price 2019
A $500m 2019 bond from Empresas Publicas de Medellin was looking at more than $4bn in orders as of late Tuesday, investors say, and is expected to price today. The municipally-owned Colombian utility issued yield guidance at 8.0% area Tuesday morning, and indicated that the size would not grow. The talk on what is to be EPM’s first bond in international markets was in line with investors’ expectations, following Monday whispers of low 8% area. It puts the trade 160bp-180bp wide of the sovereign 2019s. Last week, compatriot Ecopetrol’s 2019s got 7.677% yield, or about 100bp wide to Colombia. RBS in a research note puts fair value of EPM notes at 8.10%-8.40%, noting low leverage (0.9x) and lack of structural subordination of cashflows. This makes it about 50bp-60bp tighter than Empresa de Energia de Bogota’s 7-year 2014 on a duration-adjusted basis. Execution of EPM’s $4.9bn 6-year investment plan is the credit’s main risk, RBS says. The official use of proceeds is general corporate purposes, with EPM having communicated its intentions to grow significantly in Colombia and abroad. Bank of America-Merrill Lynch and JPMorgan are managing the transaction, rated Baa3/BB+.
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EPM Increases Stake in Power Company
Colombia’s Empresas Publicas de Medellin (EPM) says it has increased its stake in Centrales Electricas del Norte de Santander, the regional power company for the department of Norte de Santander, to 91.5%. The deal, in which EPM bought a 12.5% stake from the Federacion de Cafeteros, is worth COP28.6bn, the buyer says. The stake represents 100% of Cafeteros’ holdings in the power company, equivalent to about 190m shares.
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Bahamas Telco Selling Majority Stake
State-owned Bahamas Telecommunications Company has hired Citi to advise on the sale of 51% to a strategic investor. A person close to the transaction estimates that the company as a whole could be worth about $600m, equal to about 6x 2008 Ebitda. A BTC spokesman says that 1 year after the stake is sold, telecom companies can compete to obtain licenses to provide fixed-line telephone services. A year after that, he adds, licenses will be awarded for mobile phone operations. BTC provides services to over 334,000 wireless (through its GSM and CDMA networks), 132,000 fixed line and 18,500 broadband customers throughout the Bahamas. In addition, BTC has some 190 roaming agreements in place serving the more than 4m tourists who visit the Bahamas each year. The government intends to keep a 49% stake. KPMG has been hired to advise on financial and regulatory issues and Charles Russell will provide legal advice.
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EPM Ending Tour, 8 Handle Expected
Colombia’s Empresas Publicas de Medellin (EPM) was set to conclude today investor meetings in support of a $500m plus 2019 dollar bond, which investors see yielding in the low 8% area. This would put the Baa3/BB+ debut issuer wide of the 7.677% that compatriot Ecopetrol got last week on a $1.5bn 2019. The Baa2/BB+ oil producer paved the way for EPM with the blowout deal that rallied in the gray and amassed a near $9bn book, leading some to call it cheap. Ecopetrol did the 2019s at 99.642 with a 7.625% coupon to yield 7.677%, or UST+410bp through Barclays and JPMorgan. JPMorgan and Bank of America-Merrill Lynch are managing the EPM transaction. Meanwhile, Chile’s Arauco is also set to conclude a roadshow for a benchmark 10-year bond through JPMorgan, and Eletrobras is expected later this week with a $600m-$1bn 2019 through Credit Suisse. Both are seen pricing in the low to mid 7% range, say investors and bankers.
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RBTT President Resigns
Catherine Kumar, president and country head for Trinidad & Tobago’s RBTT Bank has resigned effective September 10, a company spokesman tells LatinFinance. He adds that her last day at the bank will be in late August. In a statement, Kumar says she is leaving “for personal reasons.” She has led the bank’s operations for 3 years. Before joining RBTT she was the inspector of financial institutions at the central bank of Trinidad & Tobago.
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Mexico Lops Off Quarter Point
As expected, Mexico’s central bank cut its monetary policy rate by 25bp to 4.5%, but analysts are divided on the need for further loosening. The bank says it is pausing the easing cycle and that future actions will be in line with the balance of risks for activity and inflation, with the latter targeting 3.0% by the end of 2010. Goldman Sachs believes that choosing to pause is better than concluding the easing cycle. “In our opinion, the recession will prove deeper than expected, therefore inflation is likely to continue to decline toward 4% by end 2009, thus enabling Banxico to resume modest easing in 3Q2009,” Goldman says. In Credit Suisse’s view, “additional rate cuts would materialize only if 12-month inflation came in below the low end of the central bank’s inflation forecasts for upcoming quarters (4.75% for 3Q and 4.00% for 4Q), which we view as improbable.”
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Mexican Petrochem Aims for Follow-On
Mexichem plans to sell up to MXP153.6m new shares to pay down debt and obtain working capital. The Mexican petrochemicals maker’s shareholders will vote on the sale August 3. If the maximum amount were sold at Friday’s closing price of MXP16.13, the transaction would raise MXP2.47bn.