Colombia has sold $1.12bn worth of new peso-denominated bonds to fund the buyback of existing debt. The new TES bonds, maturing in 2009 and 2023, will mostly pay fixed rates of between 9.80% and 10.35%.
Category: Regions
Posted inDaily Brief
Isagen Sale First-round Brings In $229m
Colombia’s government has pulled in $229m (473m pesos) from the first round of its privatization of power generator Isagen, which it put on the block for the country’s “social groups” at the end of February, in accordance with Colombia’s privatization laws. The government is hoping to capture around $262 million via the IPO of 20%, or 2.44 million shares, of Isagen, more than double its original estimate. It had set a minimum price per share of 1,130 pesos ($0.50). A second round of the share sale will open on June 2 and will be open to local and foreign investors alike.
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America Movil Treasurer Urges Domestic Reform
Ricardo Rivera, treasurer of LatAm wireless operator América Móvil, urges local regulators in LatAm debt markets to follow Peru and Mexico’s example and allow domestic investors to buy the debt of foreign companies invested in their countries. Rivera told panelists at Labif, “We have seen a lot of [local] investors that want to hold paper of other Latin American names and for regulatory reasons often can’t.” As companies pan out across the region, they are increasingly motivated to fund themselves in the currency of the countries where they have operations, says Rivera. “As an investor in other countries, issuing debt is another natural hedge for your investment and very attractive for corporates like us as a source of funding. “América Móvil has issued at attractive rates in Mexico, Peru and Colombia, but was frustrated by an attempt in Chile. “We found that between the different regulatory entities for pension funds, the Central Bank and the Ministry of Finance, there was not much coordination, which is fundamental for any kind of development to be done.” Rivera notes that Mexico’s corporate debt market has grown exponentially since allowing foreign companies to issue debt in there.
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BBVA Bancomer Preps $1.1bn+ Hybrid
Mexico’s BBVA Bancomer, owned by Spanish bank BBVA, is preparing to issue $500m worth of Tier I notes, (A1/BBB+) and upwards of €500m in Tier II notes. The Tier I notes are non-cumulative subordinated and non-preferred 15 non-call 10, due 2022 and callable in 2017 and thereafter. In year 10 they switch to floating rate and step up 100bp from the price to be determined next week. The Tier II notes are cumulative fixed-to-floating rate subordinated preferred 10 non-call 5 notes due 2017 and callable in 2012. Two simultaneous roadshows will kick off Monday and pricing may come Thursday. Credit Suisse, BBVA Securities and Deutsche Bank are joint-leads.
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Pension Reforms Should Drive Diversification
Pension fund reforms in Argentina and Mexico are designed to promote more diversification in local investor portfolios to boost long term returns. But workers in those systems must be better informed about the net returns on their portfolio and encouraged to save more through higher contributions and tax incentives to save, concluded a panel on local pension funds at Labif. Moises Schwartz, the president of Mexico’s pension fund regulator Consar says reforms in Mexico include raising the threshold for foreign investments to 20%, allowing investors to buy structured notes and offering savers five different types of accounts according to their investment horizon. Schwartz notes that Consar allows savers to switch to another Afore based on its net return rather than lower management fees in a bid to align workers savings with fund performance.
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S&P Raises Panama Outlook to Positive
S&P also hiked its outlook on Panama’s BB rating to positive from stable. This reflects “the likelihood of an upgrade if recent improvements in fiscal performance endure, economic diversification continues to boost real GDP growth, and the planned expansion of the Panama Canal can be financed in a manner that does not unduly burden government finances, either directly or as a contingent liability,” says S&P. It anticipates a further decline in net general government debt from the current 38% of GDP. Panama could be upgraded following additional evidence of fiscal consolidation, clarification of the fiscal framework (namely, pending reform of fiscal responsibility law), and definition on the size and strategy for financing expansion of the Panama Canal.
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Cemex Prices Euro Perp NC10
Cemex has priced its EUR730m perp NC10 at 179bp over mid-swaps, tight to the 180bp-185bp guidance. The book was heard at EUR3bn and it was placed mostly with European buy-and hold accounts, with some participation from hedge funds and prop desks. Barclays and JPMorgan were the leads. Proceeds are for general funding purposes.
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EEB Takeout Bonds Coming In June
Colombia’s EEB is expected to come to market with $1.1bn or more in dollar-denominated bonds in June, Jorge Barragan, the company’s CFO, tells LatinFinance. The company took out a 9-month $1.46bn loan led by ABN AMRO earlier this year to acquire Ecogas. While most of the takeout will take place in the bond market, some of the bridge financing will also be syndicated, says Barragan. The Dutch bank is sole lead.
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LatAm Lags Asia; Agencies Behind the Curve
Other interesting findings of the Labif poll are that most respondents find it “very unlikely in the foreseeable future” that LatAm will match Asia’s growth. Some 53% of survey respondents give this view, with just 34% saying it was possible this decade. Delegates say that politics is the main factor holding the region back and most do not expect a Brazil upgrade this year. Some 41% of respondents say Colombia could make investment grade by the end of 2008. While 49% of the survey group say ratings agencies are quite important to investment decisions, 68% say that the agencies are behind the curve. Of issuers, 69% say they will increase the proportion of locally denominated issuance in 2007 versus 2006.
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Mexico’s Televisa Launches 30-Year in Pesos
Grupo Televisa launched and priced Wednesday $412m equivalent in 30-year Mexican peso-denominated bond (Baa1/BBB) at par to yield 8.49%, or 67bp over the 10% of 2036 MBono, which closed the day at 7.82%. Guidance was 68-73bp over Mbonos. The bonds, payable in USD, have a make-whole flat to the MBono rate and change of control repurchase at 101. HSBC and Goldman led.