Toyota Financial Services Mexico is looking to tap the bond market this month. On Friday the company wrapped up a road show to gauge demand for a local bond issue. The sale of securities, to be denominated in pesos or the UDI inflation-linked unit, is expected to launch in mid to late February, depending on market conditions, according to a banker managing the operation. It can include both fixed- and floating-rate notes. Toyota has not set a tenor and size for the issue, rated AAA on a local scale. Indications are that all issuers will have to pay a higher rate for shorter dated notes. Last week, Coca-Cola Femsa reopened the AAA local corporate market, pricing MXP2bn bonds due February 2010 at 80bp over 28-day TIIE. Its previous sale in May 2008 was for MXP1.5bn in 2011 notes at 2bp through TIIE. Scotia and BBVA are managing the floating-rate portion of the Toyota sale, and Banamex and HSBC are running the fixed-rate portion. Proceeds from the deal will fund the lender’s operating needs.
Category: Regions
Jamaica Selling More Assets
In addition to selling the Pegasus Hotel in Kingston, the government of Jamaica is also looking for buyers for a hotel in Ocho Rios. “The privatization team is reviewing its options for the divestments of the Rooms on the Beach,” says a spokeswoman for the Development Bank of Jamaica (DBJ). She adds that the government’s Urban Development Corp. (UDC) owns the 99-room Ocho Rios hotel and a 60% stake in the Pegasus. She also says that no bank has been tapped for the sale of the Ocho Rios hotel. “The general divestment objectives are to…enable the government to achieve its economic agenda. The proceeds will assist the UDC in implementing development projects,” she says. In addition to these assets, the government is also trying to sell Air Jamaica and its 45% stake in mining company Jamalco. The IFC is advising on the Air Jamaica sale, an IFC spokeswoman confirmed. It is not known if a bank has been hired for Jamalco. The DBJ spokeswoman says these assets are not part of the UDC.
Colombia Launches Local Swap
The Colombian government has launched an offer to swap local 2009 and 2011 fixed-rate TES bonds for new 2012 and 2018 notes. The operation aims to increase the liquidity of longer-term TES bonds. The government is conducting the exchange through the brokers that are part of its existing market maker program, with the results set to be announced Wednesday. A finance ministry spokesperson declined to indicate a target amount for the swap, saying only that eligible outstanding 2009 and 2011 TES total about COP7trn ($2.9bn).
Trinidad Dismantles Ailing Conglomerate
Trinidad & Tobago is moving to break up and take ownership of CL Financial Group, which controls some $16bn in assets including one of the country’s largest insurers. T&T’s finance minister and central bank governor are billing the move as a bailout to protect investors. The group’s holdings include majority stakes in Republic Bank and Methanol Holdings, the island’s main methanol producer, several of its own banking units, including CLICO Investment Bank, and its flagship insurance company CLICO Insurance. AM Best, the insurance rating agency which downgraded CLICO on Monday to B from B++, notes CL Financial has run into liquidity problems following a rapid decline in methanol prices and the value of real estate holdings, of which the conglomerate has many. Tightening cross-border credit markets also reduced the holding company’s ability to meet short term debt requirements, while local reports say corporate depositors, including state-owned National Gas Company, withdrew hundreds of millions of dollars at CLICO, CIB and CMMB as they faced their own liquidity problems, further depleting its funding base. The government of T&T says it plans to assume control of CLICO Investment Bank, and transfer its third party liabilities and assets to state-owned First Citizens Bank. The bailout also includes full backing for CLICO Insurance and British American Insurance by the T&T central bank. CL Financial will sell its 55% stake in Republic Bank and the 56% it owns in Methanol Holdings. JPMorgan characterizes the measures as a “pre-emptive move to contain any contagion.” The shop does not believe the troubles at CL Financial are symptomatic of a broader systemic problem. Central bank and finance ministry officials didn’t return calls seeking comment. CLICO officials also declined to return calls.
Colombia Makes 50bp Cut
Colombia’s central bank has cut the monetary policy rate by 50bp to 9.00%, in line with consensus, and says more cuts are likely. The bank expects the weakness in internal and external demand and the decrease in the prices of basic products to cause a drop in inflation this year. Inflation, which the bank says was 7.67% in December, is expected to reach its target level of 4.5%-5.5% this year. Paul Biszko, senior analyst at RBC Dominion, says he expects the central bank to make a 100bp cut as soon as next month. He expected a 100bp cut on Friday. Goldman Sach’s senior LatAm economist Alberto Ramos expected the central bank to cut 75bp given the “very weak activity figures released over the last few weeks,” but had acknowledges that the sharp depreciation of the COP in recent days and residual inflationary pressures in January might have tilted the central bank into making a 50bp cut.
Ecopetrol Mulls Peru Stake
Ecopetrol has been studying the possibility of buying a stake in Peru’s Petrotech for about 10 months, according to an Ecopetrol spokesman, who adds that no deal has been signed yet. A spokeswoman at Colombia’s Ministry of Mines and Energy says that minister Hernan Martinez met with Ecopetrol and that the company says it will decide whether to buy a stake in the Peruvian firm in a few months. Ecopetrol intends to spend some $870m on acquisitions in 2009. Calls to Petrotech parent company Offshore International Group, based in Houston, were not returned.
GMD Seeks Wharf Funds, Gets State Project
Infrastructure developer Grupo Mexicano de Desarrollo (GMD) is seeking $64m in financing to develop a wharf at the Terminales Portuarias del Pacifico, says a company spokeswoman. She adds that Carbonser, a joint venture GMD set up with Techint, and Cemex unit Transenergy, offered the winning bid to develop the project in 2006 and had lined up financing from Hypo’s local subsidiary. However, she adds, Hypo ran into trouble afterward, leaving the venture without financing, which has become very difficult to come by. The developer seeks to build the wharf and will operate it for 30 years to recoup its investment. Meanwhile, State of Mexico has assigned to GMD the construction of the first phase of the Bicentenary Viaduct project in Zumpango. The first phase, says GMD, is estimated to cost MXP400m. A GMD spokeswoman says she expects GMD to be assigned all three phases of the project, which would require a total investment of almost MXP1.5bn. “This was not an auction, the government selected GMD for the project since we have worked together in many projects before,” she says. State of Mexico will pay 20% up front and the rest in installments.
Farac Takeout Bonds on Back Burner
Few, if any, lenders expect ICA and Goldman Sachs to take out a 7-year MXP32bn mini-perm used to acquire the Farac I concession, any time soon, given the poor state of cross border and local Mexican markets. Those anxious to get out will have to take a deep breath, as a bond sale to pay down the jumbo local currency loan is definitely a ways off. “We are working with Afores to see what their interest is,” Alonso Quintana, CFO of ICA, tells LatinFinance. “We have 7 years to do this,” he adds. In 2007, some lenders in the facility expressed frustration at the sponsors’ lack of transparency on timing of the takeouts, which they expected would take place within several months of the loan funding. The facility was led by Santander, Dexia and NordLB, with WestLB, ING, Inbursa and Banobras as MLAs. IDEAL’s July 2008 placement of MXP7bn in local bonds backed by tollroad assets sparked hope that a similar transaction could be executed for Farac takeouts. While the IDEAL deal seems to have confirmed the structure’s viability, a plan to actually to do so is still a ways off. The notes were placed with local pension and mutual funds.
China Bears Peru Gifts
China-Peru trade has rocketed amid heightened interest from the Asian nation in LatAm raw materials. However, some are suspicious of China’s motives.
BEST SUB-SOVEREIGN FINANCING
Capitalizing on upgrades and market opportunity, State of Mexico declined to use any major investment banks for its 25 billion peso refinance which extended duration and slashed the price on most liabilities.