Category: Regions

Prospective lenders are being offered an array of options to participate in Bimbo’s $1.7bn dual-tranche loan, but some say the reward is not enough. Participants can choose 3 or 5 years, in MXP or USD, and take tickets of $25m or $50m. A $25m ticket earns fees of 100bp at 3 years and 125bp at 5 years. A $50m ticket pays 125bp for 3 years and 150bp for 5 years, says a person close to the process. Fees come at a smaller discount to bookrunner commissions of 150bp and 175bp for 3 and 5 years than what might ordinarily be seen in a high profile retail syndication, say bankers involved. “We’re trying to offer as much as we can here,” says an executive at one of the leads. However, a banker away from the deal says similarly and higher rated deals in the US offer fatter returns. Another loans executive says the fees are “OK” but adds her bank, which attended the meeting, would not be participating, given an extremely cautious view of new deals. The 6 bookrunners on Bimbo – BBVA, BofA, Citi, ING, HSBC and Santander – are holding tickets of $200m or more, in addition to roughly $100m portions of a $600m bridge due Q4 2009. They have made no secret of the fact they are eager to be reduced by as much as possible. Their bid to do so is aided by the additional participation of Inbursa as a joint-lead arranger and Bank of Tokyo-Mitsubishi, which announced yesterday that it has taken an undisclosed sized ticket that earned it a manager title. Commitments for retail are due in the third week of March. The Thursday bank meeting in New York saw upwards of 70 people, according to estimates of an attendee. This follows a DF event earlier in the week that was heard drawing more than 100.

S&P has cut Mexico-based Grupo Senda to B from B+ and maintains a negative outlook. “The downgrade reflects Senda’s weaker-than-expected financial results during fourth-quarter 2008 and our expectation that operating margins during 2009 will remain under pressure,” says S&P analyst Enrique Gomez Tagle. Senda’s financial metrics have deteriorated, further aggravated by recent MXP depreciation, as most of the company’s debt is denominated in US dollars, S&P adds. “The negative outlook reflects the uncertainty regarding the evolution of the bus transportation sector and the effect this could have on Senda’s profitability and liquidity,” it adds. A downgrade is likely if margins do not improve during the first half of 2009. The firm’s 10.5% of 2015, of which there is $150m outstanding, was bid at 60 last week (22.39% YTW), according to Credit Suisse.

Telmex is setting aside about MXP10.3bn in cash to buy back shares this year. A company spokesman says this does not necessarily mean the company will spend all the funds on repurchases. Some MXP341m of the amount set aside this year are funds that were not spent on last year’s buyback program, Telmex says. The spokesman adds that the buybacks will be done over time, depending on market conditions and the volume of shares being traded. “For example, if we see that there is a low trading volume, we wouldn’t buyback shares that day,” he adds. Last year, the company spent some MXP12.9bn on taking out L, A and AA shares, the spokesman says.

Santander’s Mexican unit has placed MXP1.2bn in 2022 structured bonds in the domestic market at a fixed rate of 12.12%. The notes are structured so that risk is tied to a 2022 government bond, with holders receiving a payout if the sovereign issue falls below a pre-determined amount. The bonds were placed with Mexican institutional investors, according to a banker familiar with the transaction. Proceeds go towards the bank’s working capital. Santander’s capital markets unit managed the issue, rated AAA on a national scale. Fellow Mexican bank BBVA Bancomer is preparing to sell up to MXP3bn in local floating-rate bonds this month, at a maturity of up to 2 years.

A Mexico City bank meeting for Mexican breadmaker Bimbo’s $1.7bn in 3 and 5-year loans was heard well attended, drawing more than 100 people, and fees are expected to emerge after today’s sequel in New York. It is not clear whether full attendance Tuesday was due to the fact that Bimbo is the only show in town – or if bankers actually like the margins – but the transaction is being closely watched by a market sorely lacking benchmarks. After a downgrade, the margin is now 275bp over TIIE or Libor on the short end and 325bp on the 5-year, up 25bp versus last month, based on a ratings grid. Bank of America, BBVA, Citi, ING, HSBC and Santander are the leads. Fees were initially heard at 150bp on the 3-year and 175bp for 5-year, but they are expected to be sweetened. The deal marks the first real syndication since Angamos closed its $1.75bn project loan in November. Bimbo is viewed as a decent investment grade company with a compelling story, including a recent cross-border push into US bread. Proceeds support a $2.3bn M&A facility assembled late last year. Successful syndication for Bimbo would bode well for LatAm’s barren bank market landscape and should raise the confidence of reluctant lenders. Failure – or limited demand for such a high quality credit – would reaffirm the notion that the LatAm bank market remains shut as lenders hoard scarce liquidity.