Mexican electrical parts maker Xignux has priced MXP1.4bn in 2015 bonds with a coupon of 10.48%. Proceeds from the AA nationally-rated deal will repay MXP1bn in debt maturing this year at its Conductores Monterrey subsidiary, says the company. The funds will also be used for other corporate purposes. Banamex managed the sale.
Category: Regions
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Chilean Metals Producer to Hit MXP Debt Market
Chilean metals producer Molibdenum y Metales has filed to issue 2018 bonds in the Mexican market, to be denominated in pesos or the UDI inflation-linked unit. The amount has not been set, but it would be the first offering under a MXP3bn shelf filed this month through Banamex. Molymet, as it is better known, produces mainly molybdenum and rhenium at facilities in Mexico, Chile, Germany and Belgium. The transaction has national scale ratings of AA from S&P and AA+ from Fitch.
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Resignation To Impact Ecuador Debt Plans
The departure of Ecuador’s finance minister Fausto Ortiz de la Cadena, announced yesterday, could jeopardize the country’s debt service obligations, say analysts. “Ortiz was the most pragmatic and market friendly voice within the Correa administration and a defender of the importance of preserving market mechanisms,” says Goldman. “The departure reduces the probability that the government will retire some of the expensive global bonds and increases the risk [that it will] pursue market unfriendly measures on external debt,” according to the shop’s research analysts. “We are taking into the account all the uncertainty in terms of the willingness of the government to service debt obligations,” says Erich Arispe, an analyst with Fitch. “For us, the change in ministers could mean a change in policy, but with Ecuador, uncertainty is always an issue,” adds Arispe. Fitch rates Ecuador CCC. Recent reports suggested Ortiz would help oversee refinancing transactions in the local and international markets through 2009. But local bankers now say that’s much less likely under Ortiz’s replacement, Wilma Salgado, who was sworn in yesterday.
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Peru LNG Eyes Local Long Bond
Peru LNG, the LNG regasification project being built by Hunt Oil, is planning to issue $200m-$300m-equivalent in local bonds in Peru by year end. The tenor is likely to be 18 years and pricing will come at a spread over Libor, says a banker close to the process. The issuer is also considering dividing the issue into different tranches to offer shorter-dated paper to suit small investors. Among the possibilities being considered is a smaller amount of roughly $50m in 5-year notes aimed at retail buysiders, with the remainder carrying the full 18-year final maturity and a 5-year grace period. The project doesn’t need the local portion given the success in placing more than $1bn in bank and multilateral debt, notes one banker. But he adds it is important to offer a stake in a project of such national importance to the local buyside. Banco de Credito del Peru will assume a co-lead role in an eventual offering, with a second co-lead to be named as early as this week.
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Peru Miner Nears Financing Finish Line
Atacocha Mining Company, one of Peru’s leading miners, is in the final stages of financing the construction of the 115MW Quitarasca hydroelectric plant. The total cost will be approximately $120m, of which $80m will be in debt and $40m in equity, CFO Juan Alberto Franco tells Latin Finance. “We have secured the financing for Quitarasca and the name of the bank will be made public soon,” says Franco. Atacocha took control of the Quitarasca project in 2007 from the Chaprin Energy Company. It is Atacocha’s first foray outside of the polymetalic business. In addition to lead, Atacocha also mines copper and zinc. It acquired Poderosa, a related gold mining operation, in 2006. Quitarasca is a key component in the Peruvian government’s effort to guarantee that energy production meets demand, which is increasing by 10% annually. The country needs to add at least 350MW yearly to satisfy that.
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Pemex Reform Targets Higher Debt Capacity
A reform of Mexican state-owned oil giant Pemex, set for voting in mid-August, won’t result in the company’s ability to sell an equity stake to private or public investors, government officials tell LatinFinance. “It is highly unlikely that Pemex will eventually be able issue any kind of equity,” Marco Oviedo, general adjunct director for public debt at Mexico’s Hacienda, tells LatinFinance. Instead, the reform will target measures that allow Pemex to take on debt at the corporate level, he adds. Today, as a state-owned entity, Pemex’s indebtedness levels are capped at virtually zero. It uses off-balance sheet vehicles to issue notes and raise bank debt. Ability to raise additional debt on its own balance sheet would help it fund an increase in production, which is steadily dropping, says Oviedo. Other changes being considered include allowing Pemex to outsource some of its production and exploration business to third parties. An extraordinary session in congress is scheduled for mid-August, when the proposal for a change in the rules governing Pemex will be presented to the country’s various political factions. Most of these are openly opposed to anything resembling a privatization of the oil company. Pemex has a mandate to invest up to roughly 2% of Mexico’s annual GDP in E&P.
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Peru’s Copeinca to List Locally
Copeinca, Peru’s second largest fishmeal processor, is expected obtain approval for a local listing in Peru as early as today, Eduardo Castro Mendivil, CFO, tells LatinFinance. “Local investors are more stable than EM investors and the multiples in the local market have been very good thanks to ample liquidity,” says Castro, whose company has been listed on the Norwegian exchange since January of 2007. “We want to take advantage of that,” he adds. If confirmed Copeinca’s depository receipt would be the first for the fishmeal sector in Peru. The listing will not involve any new capital raising initially, but could open the door for a local market tap in the future, says the CFO. Other companies including Telefonica, Credicorp and Buenaventura have sought local depository receipt listings. No banks are assisting Copeinca in the process. Copeinca commands roughly 10.5% of the local fishmeal market.
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ISA Seeks Bridge, Bonds for Peru Project
Colombia’s state-owned Interconexion Electrica (ISA) is shopping around for banks to provide a bridge loan while it studies options to finance the construction of a dual transmission line it recently won a concession for in Peru. On June 17, ISA won the concession to build two 500KV lines from Chilca, in the south of Lima to Zapallal, 100km to the north. The cost is estimated at $125m. “We are looking at different options, but we will likely do a bridge loan before issuing bonds in Peru for the project,” ISA CEO Luis Fernando Alarcon tells Latin Finance. The first transmission line, which will initially transmit 200KV, has to be built in 20 months, the second in 30 months. ISA is the largest electricity transmission company in Peru, with more than 7,000km of power lines. In its native Colombia, ISA is studying the possibility of entering the highway business and possibly the natural gas sector down the road. It is seriously studying a bid for the Colombian government’s Ruta del Sol project, says Alarcon.
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IFC Takes 10% in Colombia Chemical Outfit
The IFC has paid $25m for a 10% equity stake in Colombia’s health and chemical products manufacturing and distribution firm Tecnoquimicas, according to the multilateral. The funds will support the expansion of the company’s operations in the Andean region and Central America, says IFC. “The investment will also help the company increase the supply of affordable and high-quality medicines in these regions,” adds the multilateral. IFC recently bought an equity stake in Panama’s Grupo Mundial for $15.6m, increasing its position in the company to 9.9%.
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Banorte Banks on SME, Mortgage Growth
Borrowers in Mexico’s small business sector and the lower portions of the housing markets will offer the greatest lending growth opportunity in the country’s competitive financial services sector, Alejandro Valenzuela, CEO of Banorte tells LatinFinance. The only remaining large Mexican-owned bank is increasing its SME portfolio through new bank account and payroll products. Valenzuela believes there is plenty of space in the market for banks willing to write mortgages for the lower end of the housing scale. “The premium segments tend to be more crowded because that’s where all the banks find good returns with lower risk,” Valenzuela says. “The C and D markets will be the next stage of development and that’s totally under-banked. Managing the risks correctly, the potential there is tremendous.” Lacking ties to one of the troubled global powerhouses, his bank is able to concentrate on careful expansion, he explains. For the full interview with Valenzuela, go to LatinFinance.com.