Colombian telephone company ETB has been advised by financial advisor Santander Investment to seek a strategic investor to inject capital into the company. ETB, of which the city of Bogota owns 80%, hired Santander in October to evaluate strategic alternatives, including a possible sale. Local analysts who do not want to be identified say the most likely investors for ETB would be Telmex, Telefonica and EPM, which is majority owned by the city of Medellin. ETB has a market cap of about COP2.4trn. The analysts add that ETB needs an investor who will help it focus less on land-line telephone services and move more aggressively into internet and cable television. According to research firm Bolsa y Renta, income from land-line telephone services was down 1.5% as of September 2008 compared to the same month the previous year. Long-distance telephone services specifically, says the firm, were down 4.9% in the same period.
Category: Regions
Mexico Rescues Cemex, Fears Systemic Risk
Mexico is rushing to prop up Cemex and keep the debt laden cement giant from getting entangled in a messy row with lenders, say senior government officials involved in the process. Rumors of the government’s plan to support corporates under pressure have been circling for weeks, but few outside Hacienda anticipated that the state would step in as boldly and swiftly as it appears to have done with the fallen Mexican blue chip. “Cemex is a different case [from other troubled companies in Mexico] because of its importance to national economy and its complexity,” Gerardo Rodriguez, head of Mexico’s public credit department, tells LatinFinance. He says the government has chosen to take a more active role in mediating talks and even provide direct funding to Cemex, characterized by many observers as a national crown jewel. Following a series of meetings with Cemex and government officials in the past weeks, banks are heard having agreed to an extension of the next 2 years’ maturities and a subsequent scheduling out of remaining debt, though further details have not been disclosed. Most of Cemex’s lenders are foreign banks that lend to numerous Mexican companies. A contentious situation with a big client could convince increasingly conservative credit committees to pull out of the country and the region, warns a New York-based syndications banker. A banker at one of Hacienda’s departments says the government acknowledges that failing to ensure a successful workout could lead to a confidence crisis of vast proportions. “We are sensitive to the possibility of systemic risk,” says the government official, who points out Cemex has so far avoided default. While Cemex faced a seemingly unmanageable maturity hump – 73% of its $14bn in total comes due by year-end 2011, according to ING – it is an otherwise healthy, cash generating concern not toppled by ill advised derivative losses, say government officials. As such, supporting Cemex poses little risk of moral hazard and is consi
IMF Agrees Stand-By for Guatemala
The IMF is extending an 18-month stand-by agreement for approximately $950m to Guatemala. The bank says that the arrangement is precautionary, as the country has no immediate balance of payments need, and that the program is part of a preventive strategy to strengthen Guatemala’s liquidity cushion in the face of an uncertain global environment. Under such stand-by agreements, the sovereign does not pay any interest until it draws on the facility. In early March, Costa Rica was also in talks with the IMF for a stand-by, but no agreement has been reached yet.
Bolsa Nominates ex-SCT Head Tellez
Controlling shareholders of the Mexican Bolsa have nominated former minister of transport and communications Luis Tellez to be its next president, the Bolsa says. The appointment will be voted on by all shareholders at a meeting to be scheduled for next month. Tellez, who has also served as energy minister and as an MD with The Carlyle Group, resigned from the government earlier this month following a scandal over recorded personal phone calls. Tellez would replace Guillermo Prieto, who has headed the stock exchange for the past 8 years. The Bolsa went public in June, raising $420m, in one of the last new equity issues the region has seen. Guillermo Medina, communication sub-director at the Bolsa, says Prieto and the controlling shareholders agreed that it was time for him to leave the presidency and let someone else take charge, now that the Bolsa is a public entity. He adds that the Bolsa’s previous president, Manuel Robleda, also left after 8 years. Some of the other candidates being considered for the post, Medina says, are Jonathan Davis, former president of the national securities and banking commission; José Antonio González, a director at the treasury ministry and Pedro Zorrilla, general adjunct director at the Bolsa.
Norsemont Buys Land, Hires Bank
Canada’s Norsemont Mining says it has acquired some 1,443 hectares of land in Peru which will become part of its 4,000-hectare copper, silver and molybdenum Constancia project. It did not disclose how much it is paying for the land. The miner also says it has hired London-based Cutfield Freeman as financial advisor to work alongside Paradigm Capital, hired in December, to evaluate expressions of interest to acquire the company.
Mexico Raises Local Issuance
Mexico plans to boost by MXP3.75bn the amount of 7 classes of government bonds it will sell in Q2, the finance ministry says. The decision to sell more 3, 5 and 10- year fixed-rate bonds, as well as 1, 3, 6 and 12-month Cetes follows a recent agreement committing Mexico’s pension funds to invest new funds in Mexican securities only for the next 12 months. Hacienda will raise the quarterly amount of 10-year bonds, sold every 6 weeks, to MXP4.0bn from MXP1.5bn in Q1, 3-year bonds sold monthly to MXP5.0bn from 4.5bn and 5-year notes sold monthly to MXP1.75bn from MXP1.50bn. Mexico also plans to sell MXP8bn each in Q2 of its 1, 3 and 6-month Cetes every week, compared with MXP7bn in Q1, and MXP7.5bn in 1-year bonds every 4 weeks, up from MXP7.0bn. The ministry said it does not plan to repurchase bonds during Q2.
Kimberly-Clark Places MXP Bonds
Kimberly-Clark de Mexico has sold MXP3.5bn of bonds in the domestic market, marking the third non-financial corporate placement of 2009. The unit of the American tissue and diaper maker priced MXP2.7bn in 13-month paper at TIIE plus 120bp and MXP800m in 2016 notes at a 9.98% fixed, or Mbono plus 233bp. The tranches were 2.3x and 4.1x oversubscribed, respectively, according to a banker managing the transaction. The transaction, rated AAA on a national scale, follows bottlers Coca-Cola Femsa and Embotelladoras Arca, which secured 13-month paper at TIIE plus 80bp and 155bp, respectively. Banamex and HSBC managed the Kimberly-Clark transaction.
Scant Room to Appeal Ecuador Buyback
Ecuador has little margin to offer 2012 and 2030 bondholders an attractive buyback offer – expected this week – with only $1.2bn in government deposits at the central bank, UBS says. Correa has said in interviews this week that a final debt restructuring proposal for the two defaulted issues will be announced before IDB meetings this weekend, and that the government has set aside funds for a repurchase. The sovereign has stopped making payments on the bonds, of which there are $3.2bn outstanding, after a government audit found them to be illegal.
Kimberly-Clark Readies MXP Bonds
Kimberly-Clark de Mexico may sell up to MXP3.5bn in domestic bonds as soon as today, according to bankers managing the sale. The unit of consumer products manufacturer Kimberly-Clark is preparing to issue a 1.5 year floating-rate tranche, with the possibility of a longer dated piece also. Banamex and HSBC manage the sale, rated AAA on a national scale. Kimberly-Clark’s last issuance was MXP2.5bn in 10-year notes which priced at TIIE minus 10bp in July 2007 through Banamex. The Mexican market also awaits domestic bond issuance from Pemex, likely including 2 and 7-year notes, after the oil producer wrapped up this week a roadshow through Santander, HSBC and Banamex.
Peru Bonds Fly Off Shelf
Peru saw monster demand for its first foreign bond sale in almost 2 years, fuelled by rising EM sentiment, scarcity value and a prudent tenor and concession. The sovereign priced late Wednesday $1bn in 2019 bonds at 99.500 with a 7.125% coupon, to yield 7.196%, or UST plus 437.5bp. Guidance was UST+450bp area, versus early whispers of mid-400s and the book was almost 5x oversubscribed, according to a banker on it. Bankers on and away from the transaction place the new issue premium at 45bp-50bp, based on an interpolation between where 2016s and 2025s traded the previous day. The BBB minus/Ba1 issue was heard trading up in the gray one point yesterday afternoon. “The new issue concession was appropriate and the 10-year is a good spot to get involved,” says West Coast-based EM fixed income investor. Another buysider notes scarcity and Peru’s relative attractiveness versus Mexico, Colombia and Brazil, as incentives to purchase. “The benefit is certainly the scarcity value,” says Siobhan Morden, LatAm debt strategist at RBS. She notes that Peru CDS had looked attractive versus the rest of region, at about 10bp inside Mexico before Wednesday’s issue was announced. Such euphoria exposes the sovereign to criticism that it came too cheap, but leaving a little money on the table seems prudent in such volatile times. “They might have been more aggressive on price, but caution is best in the current markets,” says a banker away from the deal. Goldman Sachs and JPMorgan managed the sale. Peru plans to use some of the proceeds for liability management, including the repurchase of 2014 global bonds, which it authorized Tuesday. Peru last came to the cross-border market in July 2007, with a PES4.75bn ($1.5bn) issue of 2037 sol-denominated bonds priced to yield 6.90%. Peru has meanwhile been speaking to the IMF regarding its flexible credit line, notes Goldman’s research shop, which expects Peru to qualify for the new facility.