Mexico’s central bank completed its first ever UDI bond exchange Wednesday, but only managed to buy back 17% of the $1.1bn it offered to swap. “The response was less than what we had offered,” Alicia Nunez, a director for public credit operations at Hacienda, tells LatinFinance. “It’s just a question of supply and demand. We believe in giving the market a chance to migrate towards the more liquid issue.” Banxico bought back $184.2m worth of 4.5% 2025 UDI-denominated bonds and offered in exchange 4.5% 2035 UDI-denominated bonds. An auction for the buyback price for the 2025s resulted in the issuance of $179.6m of the more liquid 2035 UDI notes. The central bank’s next auction date, March 5, could bring a similar offer for inflation-linked or fixed-rate peso-denominated bonds.
Category: Regions
Banco de Bogota Plots Peso Bonds
Banco de Bogota plans to sell COP300bn ($157m) in bonds. The Colombian bank didn’t give a date for the sale. Proceeds will go towards “strengthening the bank,” according to local media quoting bank president Alejandro Figueroa.
Mexico Launches $1.1bn UDI Exchange
Mexico’s central bank will today offer up to $1.1bn worth of 2035 UDI-denominated bonds in exchange for the equivalent amount in 2025 UDI bonds. The point of the exercise is to strengthen Mexico’s UDI curve at the long end, Alicia Nunez, a director for public credit operations at Hacienda, tells LatinFinance. So far this year, Hacienda has chosen to strengthen the 3, 10 and 30-year parts of the curve, while at the end of last year efforts revolved around the 10, 20 and 30 year points, she says. This is the first ever UDI exchange and will involve the sale of bonds worth 3bn UDIs. One UDI equals MXP3.96. Pricing on the 2025 purchase will be determined up to an hour before issuance, around noon local time, while the offer price for the 2035s will be established by an auction process. The 2025 UDIs closed Tuesday around 360bp over the IPC, while the 2035s were hovering around 363bp over, according to one of the many local brokers providing prices on the notes. UDI offerings are almost entirely sold to local investors, says Nunez.
Colombia’s Davivienda Sells COP200bn in Bonds
Banco Davivienda has priced COP200bn ($105m) in 2015 subordinated bonds in an auction process. The Colombian bank, controlled by Sociedades Bolivar, placed COP132.9bn equivalent in inflation-linked UVR units at 6.65%, and COP76bn at 665bp above the country’s IPC 12-month inflation rate. Buyers included Colombian insurance companies, financial service providers, pension funds, companies, and individuals, according to a bank official. Proceeds will be used for the bank’s working capital. Davivienda’s own DCM unit managed the transaction.
Petrobras Tops Sustainability Survey
Petrobras is the world’s most sustainable oil and gas company, according to Management & Excellence’s (M&E) annual oil and gas ranking. Mexican giant Pemex ranked 12th while Venezuela’s PDVSA ranked 20th. The survey measures oil and gas companies’ compliance with 387 accepted international standards in sustainability, corporate governance, social responsibility, ethics and transparency. M&E noted that companies with the poorest governance and sustainability practices, such as PDVSA, generally control the largest oil and gas reserves. The firm attributed Petrobras’ solid ranking to its reinsertion into the Dow Jones Sustainability Index, the independence of its board of directors and the success of its “Zero Hunger” program in Brazil.
Titularizadora Colombiana Plots RMBS
Titularizadora Colombiana plans to sell COP323.3bn in mortgage-backed securities on March 12. A COP2276.9bn 2018 senior tranche will price through an auction, while a COP68.2bn 2023 senior tranche will pay 11.5%. Both have a AAA local rating from Duff & Phelps Colombia. A BBB plus-rated COP24bn 2023 B tranche will pay 12.5% and a BBB minus-rated COP3bn 2023 mezzanine tranche is to pay 13%. The notes will be backed by more than 3.2m mortgages originated by Banco Davivienda and Banco Colpatria Red Multibancaria.
Ecuador May Offer Debt Swap: Bear
Ecuador may be considering a market-friendly solution to its impasse with debtholders, according to Bear Stearns. “We think that the conclusions of the debt commission that global bonds are illegal will be accepted by the government, yet the mechanisms for redress presented by the commission will most likely be market-friendly,” says a report issued by the shop. “This means that we think it is probable that the government will offer investors…the chance to swap their holdings at some point during the year.” As a result, Ecuador bonds remain attractive, says the shop, which tips the sovereign’s 2030s and 2012s. Local analysts appeared less sanguine on the potential for a deal. “The government does have money to pay [its] debt,” Eduardo Checa, CEO of Analytica Securities, tells LatinFinance. “But it needs to send the right messages to the international financial community.” Checa noted that the financial operators inside and outside the country are waiting to know more about what the new constitution will look like. “It’s all wait and see,” says the analyst.
Mexico Agrees Cuba Debt Deal
Mexico has struck a deal to restructure $400m in debt it is owed from Cuba, according to local press and wire reports. The deal is a major step toward the normalization of commercial and financial relations between both countries, says AFP, which cites a statement from Bancomext. It allows Mexico and Cuba to “restore their historic level of economic collaboration,” says AFP, quoting Bancomext.
CIE Buys Back 2015 Bonds
Mexican entertainment company CIE closed Friday a buyback operation for outstanding 2015 bonds, with 93% of the securities tendered for cash and a premium. The company offered $1,025 per $1,000 in principal amount tendered. CIE will also pay a $30 premium for every $1,000 tendered before January 31. The 2015 notes had a coupon of 8.875%.
Mexico Keeps Rate Unchanged
Mexico’s central bank left untouched the 7.5% overnight rate for a fourth consecutive month, citing “deteriorating economical perspectives around the world”, especially in Japan, Europe and its main trading partner the US. The bank insists it will keep a “close look” at the risk balance sheet in order to maintain the goal of an inflation rate of 3% for 2008. John Welch, analyst at Lehman, says Mexican inflation is within the target band but there is pressure from food prices. “However, food price inflation has not yet translated into generalized inflation expectations,” he adds. “In all, we believe that today’s statement remains fully consistent with maintaining our forecast for the TdF at 7.50% throughout 2008,” says Goldman. “A deeper downturn with negative effects on growth in Mexico would tilt the balance of risks toward an easing.”