Mexican paper and packaging company Corporación Durango has priced a $520m 2017 bond issue at par to yield 10.5%, in line with 10.5% area talk. The non-call 5 notes rated B+ by S&P consolidate two tranches – the other a 5-year amortizer – that were being considered. Proceeds will be used to refinance debt. Durango is doing a tender offer for $419m in bonds and some loans, which is contingent on the cash raising. About 70% of the notes went to US investors and 25% to European investors. Merrill Lynch was sole underwriter.
Category: Regions
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Banco Invex Reportedly Joins Aeromexico Race
Banco Invex intends to become the fourth bidder for Consorcio Aeroméxico, the government –controlled holding company for the Mexico’s largest airline, local press reports. It notified competition regulators earlier this month that it plans to seek authorization to bid, according to El Fianciero, which cites regulatory sources. Businessman Moises Saba has offered MXP1.74bn, and Banamex has offered MXP1.67bn, with rival Mexicana’s authorization pending.
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Durango Joins Junk Bond Fiesta
Mexican paper and packaging company Corporacion Durango plans to price today a $520m 2017 bond issue, which is talked at 10.5% area, according to bankers familiar with the transaction. The notes, rated B+ by S&P are non-call 5 and consolidate two tranches – the other a 5-year amortizer – that were being considered. Proceeds will be used to refinance debt. Durango is doing a tender offer for $419m in bonds and some loans, which is contingent on the cash raising. Merrill Lynch is the sole underwriter. Durango follows this week’s TGI (BB) and Grupo Senda (B+), the first sub-investment grade bond spree in many months.
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S&P Raises Trinidad and Tobago Outlook
S&P has affirmed its A minus rating on Trinidad and Tobago and revised its outlook on the rating to positive from stable. The move reflects continuing fiscal and current account surpluses that, in turn, strengthen macroeconomic stability and external flexibility. At the same time, the implementation of legislation establishing the Heritage and Stabilization Fund, which is estimated to reach 9% of GDP in 2007, will provide an increasingly important buffer for the country’s open, energy-based economy, says S&P analyst Roberto Sifon Arevalo. “Trinidad and Tobago’s strong current account surplus performance is expected to continue, and is forecast to reach 24% of GDP in 2007 and at about 22% in 2008,” says Sifon Arevalo. “At the same time, the fiscal performance is expected to remain positive on the back of strong energy prices,” he adds. The agency also notes a falling government debt burden with inflationary pressures that have resulted in the central bank increasing open market operations to an expected 7% of GDP in 2007 from 1.8% of GDP in 2004.
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Nine Sign on to FARAC Peso Jumbo
The first FARAC toll road concession project, led by ICA and GS Infrastructure Partners, has raised MXP37.1bn through a syndicated loan – the biggest such financing yet seen in LatAm. Santander led the transaction from its Mexico office, and was joined by bookrunners Dexia, NordLB, HSBC and Banorte. Four MLAs – Inbursa, Banobras, ING and WestLB – also participated, taking tickets of over $300m apiece. The signing took place Thursday. On Monday the MXP31.0bn acquisition facility will fund, leaving a MXP3.1bn working capital facility and a MXP3.0bn liquidity facility to be drawn down by the concessionaires later on as needed. The entire facility will be syndicated to retail in the coming months, and timing for that process is still being decided. None of the MLAs on the deal took the option to swap dollars for peso being offered by Santander, suggesting they were able to obtain the pesos through their own lending bases or other means. The biggest local currency syndication to date is a 7-year stepping up from 165bp over Libor in year one to 185bp in years two and three, 200bp in years four and five, and 225bp in years six and seven.
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TGI Brings Jumbo Junk Bond
TGI, the Colombian gas distribution company, has rekindled its dialogue with investors for the dual currency bond that was suspended in July amid credit meltdown. The company is looking to raise $900m in two tranches: a 2017 dollar bond, with guidance in the 9.5% area, and a 2027 peso tranche in the 12% area. Underwriters did not provide a breakdown of tranche sizes. Bankers away from the deal point out that the BB rated dollar tranche is well over 300bp wide of the sovereign, whose 2017 closed at 6.03% Tuesday. Colombia’s 2027 peso bond closed at 9.34%, suggesting a 266bp spread for TGI’s peso portion. That the bond looks to be on the cheap side is understandable given that TGI is a first time issuer looking to place a megabond in a market still hostile to high yield. This would mark the first cross border corporate tap of significant size since July and one of the biggest to date from Colombia. ABN AMRO has sole books and pricing is expected Wednesday.
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Deutsche’s Helms to Head LBBW Mexico Push
Volker Helms has been hired by Landesbank Baden-Würtemberg (LBBW), the largest of the Germany’s five state-owned banks, to be the country head for Mexico. He is currently a director in Deutsche Bank’s structured trade and export finance department and the head of LatAm for that business. LBBW, which has a rep office in Mexico and one in Brazil, is looking to beef up its presence in the region by providing financing options, such as credit lines, working capital and receivables-based lending, to German mid-caps operating locally. Helms, expected to start in December, is expected to oversee that expansion for Mexico, and will likely be adding staff to work with local clients. Deutsche did not return calls by press time.
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Ecuador Will Pay Debt, Seeks Cheaper Options
Ecuador is looking to restructure its debt to cut interest payments, President Rafael Correa said during an appearance at the Council of the Americas in New York. In the meantime, he reiterated plans to meet 2007 and 2008 payments, and continue to pay as long as the country is able. “We need to find cheaper funds,” says Correa, adding that Ecuador is studying ways to do this. He says options included buying back more expensive debt and selling bonds to regional lenders or other governments like Venezuela. This type of borrowing could reduce interest payments to the 5%-6% range, the official says, down from the 9%-10% it pays on its benchmark bonds. However, Correa reiterated that Ecuador will not sacrifice social programs to meet payments on the nation’s $10bn in foreign debt.
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FTI Opens Mexico City Office
FTI Consulting, the US-based business advisory firm, has opened a forensic and litigation consulting office in Mexico City office, its first in Latin America. The move comes on the back of FTI’s acquisitions this year of risk mitigation manager Holder International and communications firm Gravitas, through which it entered Colombia, Panama, Brazil and Argentina. The branch is headed by attorney Sandra Cuello, and will initially focus on business intelligence and investigations. Senior-level hires are planned, a spokesperson said.
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Moody’s Rates MBIA Mexico
Moody’s Investors Service has assigned Aaa ratings to insurance provider MBIA Mexico, based on the strength of parent MBIA Insurance Corp. and its importance to MBIA’s international expansion. Despite the parent’s operating in Mexico since 1994, new regulatory rules required the creation of a Mexico-licensed subsidiary, approved September 13. MBIA Mexico is expected to wrap the bond tranche of a $4.1bn FARAC toll road concession financing won by ICA and Goldman Sachs.