Peru’s Mibanco, the microfinance bank, recently launched a $30m syndicated B loan, following a bilateral $29m IFC A loan in June 2006. Mibanco, 6.5% owned by the IFC, is seeking participation via $5m lead arranger tickets and $3m arranger tickets. The deal will mark the first syndication for a LatAm microfinance institution, and interest is heard to be strong, as it would give participants exposure to a new asset class, and one that is relatively uncorrelated to the rest of the banking system in Peru. Wachovia and the IFC are leading the B loan.
Category: Regions
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Colombia’s EEB Brings Jumbo Bond
EEB, Colombia’s state-controlled power and generation company, launched Monday a long-awaited new issue for $500m-$710m in bonds, with maturities of between 8 and 10 years. The roadshow hits London Wednesday, New York Thursday, the West Coast Friday and Boston on Monday and should price soon afterwards. The transaction is rated BB by Fitch, with a similar rating expected from S&P. Proceeds are being used to take out a bridge loan used to acquire Ecogas. EEB is also the controlling stakeholder of TGI, which on September 26 reopened the LatAm junk bond market with $750m in 2017 notes. The deal was downsized from $900m and came at par to yield 9.50%. A planned tranche of pesos, floated in the 12% area, was scrapped entirely. ABN AMRO is sole bookrunner on EEB, with BBVA, Calyon and Mizuho as joint lead managers. The same line up was involved in TGI, which traded up to 101.5–102.0 in the aftermarket.
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Japanese Investors Look to LatAm
Japanese investors are increasing their interest in LatAm equity, says Citi in a note that follows a recent visit to Tokyo. Driving the trend is the affinity between Japan and LatAm, and growing links between the region and China, which Citi calls “a Japanese obsession.” A spectacular 5-year gain in LatAm equities compared to the Japanese bourse is also attractive. “The Japanese worry that, once the commodity “supercycle” ends, Latin America will lapse back to its old bad macro ways. We reject this; while commodity prices have supported the region’s macro gains, many other factors have been in play such as strong macro policies and floating currencies,” says Citi. Japanese investors worry about regional politics, which Citi downplays as a risk. The shop says 35% of flows into EM funds so far this year have gone to dedicated LatAm funds, while crossover money, hedge funds and domestic investors remain a presence. “The Japanese could now be added to this list of likely marginal buyers over the next few months,” says Citi. It remains bullish LatAm equities for the next 6-9 months, due to falling US rates, a weak dollar, strong commodities and a solid global economy. Brazil is Citi’s top pick, while Mexico and Peru are neutrals in its portfolio.
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LatAm Equity Jumps Another 4%
LatAm equity funds returned another 4.03% in the week ended October 11, bringing their 4-week performance to 15.95%, the second best in the past month after China Region funds, which gained 18.97% during the period, according to Lipper. So far this year, LatAm has returned a whopping 46.31%, topped only by Pacific Ex-Japan funds and China Region, which have returned 46.06% and 69.98% respectively.
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S&P Turns Bullish on Maxcom
S&P has revised its outlook to positive from stable on the B rating of Mexico’s Maxcom Telecomunicaciones. “The rating action reflects our expectation that upon the completion of Maxcom’s proposed equity offering, the issuer will post a net debt-to-Ebitda ratio below 3.0x during the next couple of years,” says S&P credit analyst Jose Coballasi. “The positive outlook also reflects our expectations that Maxcom’s financial performance could improve toward a sustained total debt-to- Ebitda ratio below 3.0x during the next couple of years.” The low rating reflects Maxcom’s debt-refinancing history, caused by its initial aggressive financial policy and limited financial flexibility. S&P also expects the current company’s stockholders to continue selling their shares in Maxcom, potentially pressuring the company’s debt and cash flow levels to enhance its growth-related metrics. Local competition may also pressure Maxcom margins, the agency adds.
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Coke, Femsa in for Juice Maker
Coca-Cola and Mexican bottler Femsa have launched a $370m tender offer for juice maker Jugos del Valle. The largest coke-bottler in Latin America has received approval from Mexican antitrust authorities to go ahead with the offer to purchase Jugos del Valle for $6.34 a share. The controlling owners of Jugos del Valle have already accepted the offer, which includes assuming $86m of debt. The two plan to invite other Coke bottlers in Mexico and Brazil to join the business once the new company, called Administracion, concludes its offer November 7.
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KUO Sells $200m 2017 Bond
Mexico’s Grupo KUO, a maker of auto parts, plastics and canned foods formerly known as DESC, priced a $200m 2017 bond issue at 99.217 with a 9.750% coupon to yield 9.875%, tight to 10% area guidance. Proceeds will pay down existing debt. Citi and Credit Suisse are joint bookrunners on the offering, rated BB- by Fitch and S&P.
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Pemex Launches Debt Buyback
Mexican oil company Pemex has launched a series of tender offers to buy back up to $7bn in outstanding bonds in exchange for cash, as part of an ongoing liability management program. Pemex’s overseas financing unit, Pemex Project Funding Master Trust, is offering to repurchase all of the outstanding debt from seven sets of fixed-rate dollar-denominated bonds – due 2011, 2014, 2015, 2018, 2022, 2023 and 2027 – totaling nearly $6bn. In a second tender, it is offering to buy back a portion of other fixed and floating-rate dollar bonds outstanding – due 2008, 2009, 2010 and 2012 – up to a maximum of $1bn, also for cash. The offer expires October 16, and is expected to be funded with the company’s $16bn cash reserves as of June, according to a Pemex official. The official declined to comment on any potential new bond issue connected to the buyback. Credit Suisse and Deutsche Bank are dealer managers.
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Carlyle Purchases Mexican Retailer
The Carlyle Group has bought Arabela, a door-to-door retailer of beauty products, from Procorp and Advent International, a private equity firm, for an undisclosed amount. Executives at the private equity firms and Arabela said in a release that the process marks a transition into a second stage of growth for the company, which was founded in 1991 by Procorp. There will apparently be no changes in senior management. Scotia Capital provided the acquisition financing.
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TGI Scales Back Junk Issue, Despite Demand
Colombia’s TGI raised $750m in 2017 dollar-denominated notes at par to yield 9.50% Wednesday, marking the first significant cross-border corporate bond in LatAm since July. The amount was $150m short of the planned $900m size, although demand for the bonds is heard to have reached $2bn. Also, a planned tranche of pesos, floated in the 12% area, was scrapped entirely. One investor who bought says the issuer chose to retool the BB rated offer to maintain a strong aftermarket bid and keep pricing in line with 9.50% area guidance. Grey market bids had the notes up as high as 3/4 of a point over re-offer and the bonds ended the day close to100.50, according to buyside traders. “It was a fairly priced deal and in this market, the fact it traded it up means it was a success,” says a portfolio manager who participated. ABN AMRO had sole books. Sister company EEB is likely to follow with its planned deal of at least $300m.