Milano is scheduled to hold a bank meeting today in Mexico and tomorrow in New York to syndicate out the portion of its $190m loan that hasn’t been taken on by bookrunners Citi, Santander and ING. The Advent-owned retailer is looking to raise as much of the transaction as it can in pesos. It will offer 275bp over TIIE or Libor out of the box for a $170m equivalent 7-year term loan. Pricing is on a leverage grid, which at 4x leverage pays 325bp over TIIE or Libor, and at below 2x, 100bp over. Out of the box, the leverage ratio is 3.0x-3.5x. Pricing on the $20m revolver is 150bp at the highest ratio and 75bp at the lowest. Citi is lead arranger and bookrunner. Today’s meeting is at the W Hotel at 9.00am in Mexico and Friday’s meeting will be held at the New York Palace Hotel starting at 8.30am.
Category: Regions
Corredor Sur Bonds Rated Investment Grade
Fitch has assigned a rating of BBB to Corredor Sur’s $125m 2025 proposed bond issue. Required approval by holders of its existing $150m 2025 issue and by the Panamanian government is expected by the end of November, after which the toll-road concessionaire will issue the new debt via Merrill Lynch. Proceeds of the new notes will fund equity distribution to the concessionaire’s direct parent, ICATECH Corporation, a subsidiary of Mexico’s Empresas ICA. The bonds are secured by toll revenues.
Newland Sells $220m Bonds
Newland International, builder of the Trump Ocean Club in Panama, has priced a $220m 2014 NC3 bond offering at 96.934 with a 9.5% coupon to yield 10.25%, versus 9.375%-9.625% guidance. Postponed from last week, the issuer took advantage of a 24-hour period of relative calm in the market to issue at a deep discount. Demand reached $300m, according to bankers on the deal. The book consisted primarily of international investors, which made offering a discount of more than 25bp easier, as they are not exposed to the tax issues that come with such a pricing. The recent pulling of several other deals, such as fellow resort Cap Cana’s $500m offering, may have also helped. Bear Stearns led the transaction.
Mexico Takes Out More USD Debt
Continuing a longstanding rotation from dollars to domestic debt, the Mexican government has retired another $88.6m in external 2011s, 2012s, 2013s and 2015s through a warrant exercise. Holders of XWDB07 debt exchange warrants were delivered MXP514.2m in M2014 bonds and MXP382.1m in M2024 bonds. “The exercise of this series of warrants improves the internal-to-external debt ratio, and reduces the vulnerability of public finances to adverse external shocks,” says Mexico’s finance ministry. The government reiterated its commitment to strengthening the structure of the public debt portfolio. “As long as macroeconomic and financial conditions permit, the federal government will continue to carry out the necessary operations to insure the most favorable cost conditions for public debt in the medium and long-term, subject to a prudent level of risk,” says the ministry. The XWDB07 warrants were one of three series issued March 15. Total federal debt was unchanged by the deal.
Citi Upgrades Peru Bolsa
Citi has upgraded Peru to overweight from neutral in its regional portfolio based on solid macro fundamentals, with GDP growth forecast to hit 7.9% this year. “The fiscal and current account surpluses for 2007 are forecast at comfortable levels of 3% and 1.8% of GDP respectively,” says Citi. It adds that while inflation is rising – in line with other countries in the region – it remains under control at 3.4% in 2007, held down by some recent tightening of monetary policy. “What makes the market look attractive at present is short-term timing,” says the shop. It adds that MSCI Peru is just 38% above its August 16 close, versus Brazil at 67% and says Peru’s ROE, at 37.6%, is the highest in EM. “Peru has seen a massive improvement in its average ROE from 10.5% in 2003,” says Citi. It adds Peruvian gold miner Buenaventura to the focus list alongside its preferred domestic play, Credicorp. Its play on Peru equity coincides with a bullish prediction for gold to reach $850-1,000. Citi also raised its mid-2008 target for the IGBVL index to 25,000.
Cemex Selling US Assets to Pay Debt
Cemex Inc, the US subsidiary of the Mexican cement leader is in negotiations with Ready Mix USA, a private ready-mix concrete company with operations in the Southeastern United States, to expand the scope of their ready-mix joint venture. This includes asset sales, with proceeds earmarked to reduce the Mexican firm’s debt. Cemex intends to contribute assets valued at approximately $150m to the jv and intends to sell additional assets to the jv for approximately $227m in cash. As part of the transaction, Ready Mix intends to make a $150m cash contribution to the jv. Ready Mix will manage all the newly acquired assets. Following the transaction, the joint venture will continue to be owned 50.01% by Ready Mix and 49.99% by Cemex. The transaction is subject to the signing of a definitive agreement and obtaining the required regulatory approvals. The 2006 Ebitda for the operations involved was approximately $47m.
All Eyes on Newland for High Yield
After last week’s beach resort bond wipe out, all eyes are on Newland International Properties, the builder of the Trump Ocean Club in Panama. Because of last week’s market volatility which claimed a number of high yield scalps, the issuer postponed at least until this week a $220m 2014 NC3 bond issue, talked at 9.375%-9.625%. Bear Stearns is the underwriter. Bond markets were closed Monday but further bloodletting on the US equity market suggests risk aversion will remain elevated. Besides Cap Cana’s $500m 2017 amortizer, the following were pulled last week: Grupo Unialco’s $150m 7-10-year, a $275m 10-year from Mexico’s Sanluis, a $150m 2010 from Brazil’s Banco Cruzeiro and a $220m 2014 from Argentina’s Banco Macro. Other less liquid and lower rated names waiting in the wings will no doubt have to hang back. Time is running out for LatAm issuers hoping to secure funds in 2007. As the holiday season approaches, investors will start to pull chips off the table to safeguard the year’s gains.
Costa Rica and Panama Corporates Surface
Costa Rican supermarket chain Grupo Monge is preparing a 10-year NC5 bond issue via Merrill Lynch, with a global roadshow to begin this week. Separately, Panama’s Corredor Sur road project is planning a consent solicitation for a $125m increase to an existing $150m 6.95% 2025 bond. The consent launches today and closes November 26 and must receive Panamanian regulatory approval before additional debt can be sold. Corredor Sur’s initial offering was rated BBB-/Baa2, while Grupo Monge is a new issuer expected to get a double B handle. Merrill Lynch is sole manager of both transactions, part of a concerted push to increase its DCM activity in Central America and the Caribbean.
Colombia Minutes Highlight Hawkish Tone
Minutes from the Colombian central bank’s last policy meeting, when kept rates unchanged at 9.25%, maintain a hawkish bias. They acknowledge a fall in inflation while also noting that price increases are above target. “The Bank conveys a data-dependent tone and, at a minimum, indications that it will work to keep expectations anchored until impacts from its tightening to date become more evident,” says Merrill Lynch. Others detected a slightly different tone. “The minutes of the central bank’s October monetary meeting, in which the board of directors voted unanimously to leave the reference rate unchanged, had a less hawkish tone than the minutes from earlier meetings,” says Credit Suisse. It adds that the central bank is starting to see the benefits of tightening that started in April 2006.
Colombian Mortgage Lender Issues $152 Securitization
Titularizadora Colombiana has issued COP312bn ($152m) in TIPS mortgage-backed securities, it said in a statement. Titularizadora sold COP224bn in a10.34% 2017 tranche, COP61bn in a11% 2022 tranche, COP23bn in a12% 2022 tranche and COP4bn in a 13% 2022 tranche. The issue was the Colombian secondary mortgage market company’s fifth backed by fixed-rate mortgage loans in pesos, and consists of loans from local banks Bancolombia and BCSC.