Eton Park, a New York-based multi-strategy fund and Axis, a Mexico City-based private equity shop, said Wednesday they have started a new company called Navix that will specialize in LatAm structured lending. The company is registered as a SOFOM, or specialty finance company that has raised $100m in equity finance. The next step will be to lever up its balance sheet with loans and credit lines and begin structuring asset-based loans to mid-market companies. “The needs of most Mexican corporates are underserved by the local financial institutions,” Gonzalo Gil White, managing partner at Axis and the CEO of Navix, tells LatinFinance. Navix will target a variety of sectors initially in Mexico, but very likely in other countries like Brazil eventually as well. One of its focuses includes short-term project and working capital loans for energy sector companies. Eton Park is the majority equity holder in the venture.
Category: Regions
Pemex Prices $2bn in Bonds
Mexican state oil company Pemex priced a $1.5bn 2018 bond issue at 99.316 with a 5.75% coupon to yield 5.84%, or 128bp over UST. A $500m retap of 2035 6.625% notes priced at 103.697 to yield 6.339%, or 150bp over UST. Demand was at least $4bn on the 2018 notes and $1bn on the 2035, according to bankers on the deal. Moody’s rated the bonds Baa1, and S&P BBB+. Proceeds will go towards the repurchase offer of notes announced last week. Lead managers are Credit Suisse, Deutsche Bank and Merrill Lynch.
China Boosts Copper Prices
Bullish for the overall LatAm macro story is consumption from China, particularly of raw materials. Barclays says copper supply disruptions in Chile, Mexico and Peru have helped keep prices high, but longer term, Chinese consumption will be the driver.
Pemex to Issue Bonds to Support Buyback
Mexican oil company Pemex is preparing a new 10-year bond issue of “benchmark size” to raise funds to support its repurchase of up to $7bn in debt, according to bankers on the deal. It also plans to reopen its 2035 issue. The exact size and timing of the sale still remains to be set. Deutsche Bank, Credit Suisse and Merrill Lynch are coordinating the offer. 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 offered to repurchase 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 expired Tuesday, creating synthetic demand for a new issue this week. Credit Suisse and Deutsche Bank are dealer managers.
BBVA Continental Preps $250m A/B Loan
BBVA’s Peruvian arm BBVA Continental is looking to raise $250m through an A/B loan. The IFC will take a $100m A piece, while a $150m B loan will be syndicated out by lead bank Standard Chartered, say bankers close to the process.
Saba, Citi Sweeten Aeromexico Offers
A consortium led by Citigroup’s Banamex appeared to have the upper hand in a bidding war for Mexican airline Aeromexico late Tuesday. Banamex and rival bidders the Saba family each upped their offers Tuesday after Mexico’s deposit insurance agency IPAB announced it would accept the existing MXP1.84bn Saba bid if no better offers came. In a statement to the Mexican securities regulator Tuesday afternoon, the government said it would accept the Banamex offer – $171m cash plus warrants reflecting the future value of Aeromexico, totaling about $206m – unless something better comes up by Wednesday afternoon.
Peru Microfinance Bank Launches Financing
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.
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.
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.
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.