Ecuador’s president was on TV over the weekend talking a big discount on a repurchase of sovereign 2012 and 2030 bonds, according to wires. “Our proposal will be basically to try to repurchase that debt, but with a great discount,” Correa says, Dow Jones reports. Bondholders were last month expecting a cash transaction in which they are asked to take at least a 70% haircut plus past due coupon and accrued interest. Trustee US Bank and law firm Milbank Tweed were working on getting holders of Ecuador’s defaulted 2030 to form an ad-hoc committee. Ecuadorian brokerage Analytica Securities says that the outcome of that committee could be acceleration of payment of principal on defaulted bonds, for which it would need 25% of holders. However, the shop also notes that the prospects of legal action are unclear at best, and may not be more attractive than accepting a government offer. Lazard Freres is advising the sovereign.
Category: Regions
Macquarie Unveils MXP Infrastructure Fund
Macquarie is preparing to launch a major MXP-denominated fund focused on equity investment in Mexican infrastructure, Mark Ramsey, president of Macquarie Capital Mexico, tells LatinFinance. “It’s an opportunity to provide Mexican institutions with cash to invest in infrastructure in Mexico and to contribute to the government’s infrastructure plan here,” he says. Ramsey declines to comment on the exact size, noting only that would be “substantial,” and aims to be “hundreds of millions of dollars” equivalent. Macquarie expects to inject its own funds, though Ramsey does not disclose the extent of its participation. The fund aims to launch in the next 3 months, and will be offered mainly to Mexican institutional investors, but also to the international buyside. Ramsey says the aim is to take advantage of opportunities from the Mexican government’s MXP270bn Fonadin infrastructure program. “Mexico has an extremely well-developed and set-out infrastructure program, perhaps more clearly set out than any other country at the moment,” Ramsey says. The Australian bank is eyeing opportunity in roads, rail, ports, water/waste, and renewable energy. He says Macquarie is very optimistic about the long-term prospects for Mexico and LatAm. The international group opened its Mexico unit in January with a staff of 15, its most significant LatAm office to date. The new fund is a part of Macquarie’s initial efforts in Mexico, where it plans to offer the same broad range of advisory and investment banking services as in other markets.
Barclays Cuts Peru Growth Forecast
Barclays has chopped the forecast for this year’s Peru GDP growth to 0.4% from 1.9%. The shop says most recent data shows GDP expanded just 0.19% year-on-year in February, well below expectations of 1.3%. It also revised the inflation forecast to 2.6% from 2.7%. The currency is also expected to lose value, reaching PES3.35 per dollar by the end of the year. April 16 it closed at PES3.08. Barclays also expects the central bank to become more aggressive in cutting rates, and predicts a 150bp reduction in May, followed by 100bp in June, from 5% this week.
Funds Pile Back Into EM Equity
A Bank of America-Merrill Lynch survey of fund managers shows they are jumping back into global EM equity and have an increased appetite for risk. China remains the most popular EM country, with 51% of investors overweight there and 26% of the buyside expecting to see its economy strengthen in the next 12 months. Investors are also overweight Brazil, the survey shows. The most popular GEM sector is consumer discretionary, which BofA-ML says expresses confidence in EM consumers. In the week to April 16, LatAm focused equity funds saw fresh inflows, according to EPFR Global. “Flows into Latin America equity funds were driven by renewed enthusiasm for Brazil’s export story and the resilience of its consumers. Brazil Equity Funds took in another $255m as the value of assets under management climbed to 152% of the beginning of the year total,” says the fund tracker.
AMX Set for Huaso Deal
America Movil is expected to sell today up to UF4m ($145m) in 5-year bonds on Chile’s domestic market. The Mexican wireless provider claims it is the first “huaso” bond, or issue in Chilean currency by a foreign entity. The Mexican telecom, whose Claro brand operates in Chile, plans to sell up to UF4m in 3% 2014 bonds, up to CLP83bn ($145m) in peso-denominated 5.5% 2014 bonds or a combination of the two totaling UF4m. The transaction is rated A3 on a national scale. Banchile-Citi is managing the sale, which comes from a $1.2bn shelf. Rival CTC Chile, controlled by Spain’s Telefonica, priced earlier this week UF5m ($180m) in 2014 notes at 101.20 with a 3.50% coupon to yield 3.23%.
CFE Charges Up Local Issue
Mexico’s Comision Federal de Electricidad (CFE) has filed to sell up to MXP4bn in domestic bonds, according to regulatory documents. The issuer has the option to sell both MXP and UDI-denominated notes, at tenors of up to 12 years, under a MXP24bn shelf. The transaction, rated AAA on a national scale, still requires approval but documents indicate April 24 as the offering date. BBVA is managing the transaction, widely expected in the wake of a recent successful MXP10bn domestic sale from fellow state-owned energy firm Pemex. Mexico’s finance ministry had been working with the 2, so that they might offer transactions that could set pricing benchmarks and help resolve the impasse between investors and corporate issuers that has shuttered the domestic bond market. April 2, Pemex sold MXP6bn in 2012 bonds at TIIE plus 100bp and MXP4bn in 2016 bonds at a fixed 9.15% in a well oversubscribed issue that sets price points for CFE.
Telemar Aims Under 10%
Telemar has issued guidance of 9.75%-10.00% yield on an upcoming issue of $750m in 2019 bonds, expected to price this week. The BBB minus/Baa3 rated deal has been roadshowing in the US and Europe. In September, the issuer tried to achieve 8.50% area yield on 10-year notes, part of a $1.5bn offer of 5 and 10-year notes that was pulled amid market volatility. Investors say spreads have widened about 150bp-200bp since then. Proceeds will go towards refinancing debt from last year’s acquisition of Brasil Telecom. Telemar has BRL3.6bn in 1-year bridge due in July. It is followed by a BRL2bn facility due in December that it opted to take out after aborting the September cross-border sale plan. In the local market, Telemar is selling up to BRL3bn in debentures, including 2011s and 2012s, paying DI plus 115% and 120%, respectively, also to retire debt. Citi (on the left), Banco do Brasil, Bradesco, Itau and Santander are managing the overseas sale. The issue is set to be the second from a true Brazilian corporate this year, following Odebrecht’s $200m offer last week, which traded up.
Investors Devour Jumbo Colombia Tap
Colombia has reopened its 7.375% of 2019 bonds for $1bn, doubling liquidity on the back of a near $4bn book. The Ba1/BBB minus/BB+ sovereign retapped the notes – first issued in January – at 99.99 to yield 7.375%, or UST plus 458.5bp.The issuer indicated 7.500%-7.625% guidance in the morning on a benchmark-sized transaction, investors say, then quickly tightened to 7.5% area as demand surged, and priced at the low end. “The republic saw a window of opportunity and had been exploring this possibility for some time,” Maria Catalina Escobar, head of international capital markets at Colombia’s ministry of finance and public credit, tells LatinFinance. The sovereign indicated it would pre-fund 2010 if it saw an opportunity and the transaction is consistent with the strategy of anticipating any possible deterioration in market conditions. Demand reached about $3.8bn, according to bankers managing the sale, from about 150 accounts in the US, Europe, LatAm and Asia. The bonds were trading at 102.5-103.25 late Monday and bankers on the deal pegged the reopening concession at 35bp, based on the previous closing yield of 7.02%. Investors and bankers away from the deal meanwhile calculated the pickup at 35-50bp. “The concession seemed generous at first, but tightened as the deal gained momentum, and ended up being fair for such a large amount,” says a banker away from the transaction. He notes that if an issuer can get such a strong book in this market, going for $1bn is a sound strategy. Citi and JPMorgan managed the transaction, which pre-funds 2010. The original $1bn January sale priced at 99.136 to yield 7.500%, via Barclays and Morgan Stanley, and helped cover 2009 needs. The bonds were heard bid at 101.5 bid Monday afternoon. The issue sets a robust benchmark for the throng of Colombian corporates lining up to tap the same tenor in dollars. Escobar says there was no specific discussion of corporates in the present issue, but that the sovereign does take into account the p
Vetra Seeks Andean Partners
Colombia’s Vetra Energy Group is in search of joint venture partners to help bring 5 oil fields in Colombia, Ecuador and Peru into production, director Gustavo Dalence tells LatinFinance. The fields, he says, have estimated reserves of about 100m barrels of oil. Vetra is in the process of selecting an investment bank to assist in the search and has already received proposals from 3 institutions, Dalence says. He declines to disclose names. Vetra, which was established in 2003 by former PDVSA executives, also has sights set on acquiring blocks in Africa and the Middle East, Dalence adds.
America Movil Sets Chile Bond Terms
America Movil is preparing to sell up to UF4m ($145m) in 5-year bonds on Chile’s domestic market as soon as this week. The issue, which the Mexican wireless provider claims is the first bond issue in Chilean currency by a foreign entity, will be realized through the issue of up to UF4m in 3% 2014 bonds, up to CLP83bn ($145m) in peso-denominated 5.5% 2014 bonds or a combination of the two totaling UF4m, according to regulatory documents. No date has been set, but the issuer aims to launch this week, according to a banker managing the deal, rated A3 on a national scale. Banchile-Citi is managing the sale, which comes from a 30-year $1.2bn program. America Movil operates its Claro unit in Chile, but the bonds will be issued by the Mexican parent controlled by billionaire Carlos Slim.