Ecuador plans to buy back its foreign bonds due in 2012 and 2030 at a discount of at least 70% this month, according to local and wire reports citing Economy Minister Diego Borja. Borja reportedly says the government will hold a series of auctions to purchase the securities. The 2012 and 2030 bonds – which have an outstanding face value of more than $3bn – trade at 20-30 cents on the dollar following last month’s default on the 2012s, a move which fuelled speculation that the government was trying to drive down prices of its debt. Ecuador is still deciding whether to default on $650m in global 2015 bonds, on which it missed a $31m payment last month.
Category: Regions
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Argos in Deals with Vale, Paz del Rio
Colombia’s Cementos Argos has agreed to sell some of its coal mining concessions and logistics assets to Vale for $373m in cash. Research firm Bolsa y Renta analyst Carlos Eduardo Gonzalez says that Argos had previously expressed intentions of selling these assets and that the price Vale has agreed to pay is in line with expectations. The shop rates Argos a buy. In this transaction, Credit Suisse and Bancolombia advised Argos. In a separate deal, Argos has invested $41.2m to acquire limestone rights from Aceria Paz del Rio, also from Colombia. Terms of financing were not disclosed and company officials were not available for comment.
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Companies Consolidate Peru Subsidiaries
Several companies operating in Peru have announced they are consolidating subsidiaries. In late December, Scotiabank notified Conasev of its plan to merge its Servicios, Cobranzas e Inversiones subsidiary with Recaudadora. Also, agricultural company Palmas del Espino has merged subsidiaries Industrias del Espino and Negociacion Agricola Ganadera Don Manolo. Industrias absorbed the second subsidiary effective January 1 and the company says the transaction will not entail any increase in capital, stock swaps or payments. In addition, December 24 Telefonica announced it was merging its Peruvian operations, Telefonica del Peru and Telefonica Moviles Peru, also known as MoviStar. Victor Miranda, an analyst with Pacific Credit Rating in Peru, says the move will make TdP the market leader in mobile communication, where Telefonica Moviles has a 60% share.
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Volatility Halts Su Casita Sale
Shareholders of Su Casita have voted to suspend an agreement to sell to Spain’s Caja Madrid the 60% of the Mexican mortgage lender it does not already own. The decision was made “due to the global financial crisis, the volatility of the capital markets and the negative state of the global economy,” Su Casita says. To make up for some of the EUR215m the sale would have brought in, the shareholders also agreed to raise MXP500m in fresh capital during the first quarter of 2009.
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Fitch Cuts Transtel on Debt Exchange
Fitch has lowered the ratings of Colombian telecom operator Transtel Intermedia to D from C, it says. The move follows the company’s announcement that it is seeking to exchange its 12% 2016 senior notes with new senior secured step-up notes. The agency finds that offer “qualifies as a distressed debt exchange due to the diminished terms of the proposed notes.” Transtel has made the exchange offer during the 30-day grace period following a missed December 1 coupon payment, Fitch notes, and the company should be further challenged by a $4.5m maturity of a 2008 bond on December 31. In a tender launched Tuesday, Transtel offered holders of the 2016s an equal principle amount in step-up notes plus warrants for its common stock, in an exercise led by Morgan Stanley, expiring January 22.
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Moody’s Puts Brakes on Ford Mexico
Moody’s has chopped the long term Mexican national scale debt rating of Ford Credit de Mexico to Caa1.mx from Ba3.mx. The outlook is negative. The new long-term Mexican national scale rating indicates very weak creditworthiness relative to other domestic issuers. The cut comes after the agency downgraded parent company Ford Motor Credit’s senior unsecured rating to Caa1 from B3, with negative outlook.
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Crisis Uproots CentAm/Caribb Advantage
The global financial crisis has reversed the typical relationship between Central America/Caribbean credit and the bigger LatAm economies, which are beating the former on a returns basis. CentAm/Caribbean has historically been a diversifier that outperforms in a bear market and underperforms the rest of the region when markets go up. However the JPMorgan CACI index, which tracks CentAm/Caribbean sovereign and corporate credit, is down 18.7% in the year to December 18 on a USD total returns basis. This compares to a loss of 12.1% during the same period for the EMBIG, which tracks the bigger sovereigns. “The market is upside down. It’s not really fundamentals driving the market, it’s technicals,” Franco Uccelli, a VP for strategy in the LatAm research group, tells LatinFinance. “Once the market goes back to normal, we’ll return back to the normal trading performance of Central America and the Caribbean,” he adds. According to the analyst, this temporary dislocation will likely not be corrected until mid-2009 or H2. In the year to date, CentAm/Caribbean corporates have lost 28.8% and sovereigns declined 17.0%, according to the CACI. Grenada is down 51.9%, Belize off 46.0% and DomRep dropped 42.6%. The best performers were Costa Rica (-2.7%), Barbados (-6.9%) and Trinidad & Tobago (-7.0%), amid a flight to quality. Despite 2008 losses, investors should still consider CentAm/Caribbean credit for its typically low beta performance and the fact that it is less correlated to the wider market. “It’s a nice way to diversify your investment portfolio,” says Uccelli. A leading gripe from the buyside is lack of liquidity, and the last two months have been thin, but there is improvement. “We’re starting to see some liquidity coming back . . . that’s a good sign,” says Uccelli. The CACI was up 7.55% last year and returned 12.63% in 2006.
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Mexico Rethinks Local Debt
Following a surprise $2bn dollar bond placement last week, Mexico plans to boost its domestic bond sales in Q1 2009, Hacienda says. It will double sales of its 20 and 30-year fixed-rate bonds to MXP2.0bn every 6 weeks and also sell MXP2.5bn in 10-year bonds every 6 weeks, up from MXP1.0bn in Q408. The government also aims to auction MXP4.5bn of its 3-year bond monthly, up from MXP3.1bn currently. The new plans come after it pared back sales in October of its long-term peso bonds through year-end, and offered to buy back up to MXP40bn of bonds. The repurchases will not continue. Mexico reopened international bond markets for EM issuers with a tightly priced $2bn 10-year 5.950% benchmark via Morgan Stanley and Goldman Sachs that took out a third of the sovereign’s 2009 funding needs.
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ACP Awards Third Excavation Contract
The Panama Canal Authority has awarded a third excavation contract to Costa Rica-based Constructora Meco, which submitted the winning bid of $36.7m. The excavations will help create an access channel linking the new Pacific locks with the existing Gaillard Cut. An ACP spokeswoman says the entity will use its own cash to finance the project and not the $2.3bn in financing it recently obtained from multilateral banks. The other five companies that presented bids are Cilsa Mineria Maria, which bid $74.7m, Conalvias-Retraneq with $61.3m, Constructora Santa Fe, which bid $46.0m, Corporacion M&S, which bid $45.2m and Constructora Urbana, which bid $38.2m. A fourth and last excavation contract will be awarded in July, says the spokeswoman, adding that bidding will begin in February.
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Banorte to Sell MXP2.5bn
Banorte has notified the Bolsa de Valores that it intends to sell up to MXP2.5bn in subordinated debt next year. The bank says the issuance is part of a 5-year program worth MXP15bn from which it sold MXN 2.75bn in 10-year bonds in June and another MXN5bn in March.