Bimbo’s relationship lenders – which in December put up $2.3bn to help the Mexican baker acquire assets from Weston Foods – are looking to reduce exposure by syndicating out $1.7bn in 3 and 5-year loans. Bankers hope the transaction will provide a price benchmark to a market sorely lacking order. The margin on the 3-year facility is Libor or TIIE plus 250bp, while the 5-year offers 300bp over. The club of lenders, made up of Bank of America, BBVA, Citi, ING, HSBC and Santander, are apparently requesting pro-rata participation on the two tranches. They are heard to be offering tickets of $212.5m that pay up front fees of 150bp for the 3-year and 175bp for the 5-year portions. Participants may lend in either MXP or USD, according to a banker close to the deal. People close to the transaction say they are pleased with the way things have gone so far with the MLA stage. “Bimbo is a top of the line company,” says a lender away from the deal. Elsewhere, the LatAm bank market is relatively busy for early January. Ternium is out with a $350m via Citi and Calyon, while miners Mirabella and Milpo are expected to reignite syndication efforts to try and close their respective transactions, launched last year. Cemex is meanwhile wrapping up a jumbo refinance.
Category: Regions
LatAm FX to Outperform Other EM
Merrill Lynch says it expects LatAm currencies to outperform those of Asia and the EMEA in the first half of 2009 as “a good portion of LatAm corporates already cleaned their derivatives positions.” This, says the shop, should help the BRL and MXP. However, it warns that the CLP and PES, which are highly dependent on commodities, could underperform compared to other LatAm currencies, but for now has positive expectations. The BRL is expected to strengthen to BRL2.05 by June, the peso to MXP12.00, the CLP to 620 and the PES to 3.00. On January 8, the BRL stood at 2.26, the MXP at 13.65, the CLP at 627 and the PES at 3.17. By the end of 2009, the shop expects the positive trend to continue. By then, Merrill sees the BRL at 1.90, the MXP at 11.50, the CLP at 580 and the PES at 2.95.
LatAm Seen Outperforming Global Growth
While economists agree that GDP growth in LatAm will slow down significantly, it may still fare better than the world as a whole. A report from Peru’s Banco de Credito notes that while it expects LatAm growth to slip to 2.2% in 2009 from 4.4% in 2008, the global economy will grow only 1.6% in 2009, down from 2.8% in 2008. “It could be said that the panorama for 2009 still looks quite manageable. However, depending on the magnitude of the international crisis, performance for the following years is still hard to predict,” says the bank. Citi’s forecasts are not as optimistic as BCP’s. Citi predicts global growth in 2009 of 0.5% and 1.6% in LatAm.
Mexico Sees Zero Expansion
Mexico’s finance secretary Agustin Carstens says Mexico will likely not grow in 2009, adding that if the US government implements a strong enough stimulus package, it could expand slightly. His prediction is similar to that of several shops. Credit Suisse expects GDP to rise just 0.6%, Merrill Lynch predicts 0.4% and JPMorgan sees no growth at all. Since 80% of Mexican auto industry exports go to the US, Merrill expects the slowdown in the US to hurt consumer spending, dent employment levels, cause a drop in real wages and a decrease in worker remittances. Credit Suisse says Mexico’s industrial output will contract by 2.2% in 2009, compared to a fall of 0.3% in 2008.
Peru Keeps Rates Steady
As expected, Peru has kept rates unchanged at 6.5%. Analysts had expected the move since inflation continues to be high at 6.65%, down only slightly from its November peak of 6.75%.
Fitch Sees Colombia Exposed to Venezuela
Fitch sees risk in Colombia’s considerable trade exposure to Venezuela and its vulnerability to external shocks due to limited trade integration and high commodity dependence. It also notes comparatively high fiscal and external solvency ratios. The sovereign’s creditworthiness is supported by a record of macroeconomic stability, disciplined fiscal policies and deft liability management, it adds. However, Fitch gives a BB+ rating to Colombia’s $1bn 2019 bond, lower than other agencies. Moody’s rates the bonds Ba1 and S&P gives them a BBB minus.
Ternium Seeks to Close Loan
Mexico’s Ternium is heard looking to close a $350m 5-year amortizing loan this month. The deal through Calyon and Citi was launched in November and commitments are due by January 16. The average life is roughly 3 years. Only five banks are expected to participate. “I think it will be a club deal at the end of the day,” says a banker not leading the transaction. Integrated steelmaker Ternium, which has operations in Mexico, Argentina, the US and Guatemala is being marketed as a Mexican credit.
Santander Able to Buy in Peru
Pacific Credit Rating has maintained its A financial strength rating for Banco Santander Peru, citing the bank’s sound expense and investment policy, risk management, strength and experience at the parent company and its potential to grow through acquisitions. “The bank has not announced any concrete plans to make acquisitions, but it is able to buy smaller banks this year,” says analyst Eduardo Lora. It could buy banks that cater to individuals, to diversify away from corporate banking, where Lora says it has been focused.
Colombia Seizes Window With 2019
Colombia has priced a $1bn 2019 bond at 99.136 with a 7.375% coupon to yield 7.500%, or 502.9bp over UST. Bankers away from the deal say Colombia paid about 50bp-60bp new issue premium, based on its 2017s opening Tuesday at yields of around 6.95%. This compares to roughly 40bp on last month’s Mexico issue. The Ba1/BBB minus bond through Barclays and Morgan Stanley was heard trading up 25-50 cents in the grey market. The transaction saw demand of just over $3bn, according to the issuer, from 141 accounts, about 66% of which were based in the US, 20% in Europe and 10% in Colombia. “We saw that there were good conditions and decided to execute the trade, anticipating harsher conditions in the future and other countries and corporates trying to access funds,” Maria Escobar, head of international capital markets at Colombia’s ministry of finance and public credit, tells LatinFinance. “We thought if we were the first issuer and a good issuer we could re-open the market for sovereigns and corporates,” she adds. Escobar says Colombia has always been active in pre-funding, but conditions last year did not allow this. The sovereign secured $2.4bn loans from multilaterals in October as a backup. Now, she says the sovereign will decide whether to disburse $1.4bn of those funds, or to use the full $2.4bn and keep the rest to pre-fund 2010. More details will be available when Colombia announces its 2009 financing plan later this month. Colombia last hit the international bond market almost a year ago, reopening for $650m its 7.375% of 2017 bond to yield 5.997% and $350m in 7.375% 2037 bonds to yield 6.601%.
Termoemcali Gets Rating Reprieve
Fitch has upgraded Colombia’s Termoemcali’s $153.7m restructured senior secured notes due 2019 to B minus (stable) from CCC to reflect improved flexibility to meet debt service obligations primarily from expected reliability payments and to a lesser extent from gas sales. “The rating action also considers the reduced dependence on the capacity (Tranche E) payments from Emcali (rated CCC, stable outlook by Fitch), which constrained the previous rating,” says the agency.