Mexican telco Telmex has sold 9.5bn pesos ($863m) of local bonds in two tranches, carrying two maturities. It sold 5bn pesos of 30-year bonds to yield a fixed rate of 8.36% and 4.5bn pesos of 5-year paper at 0.1 percentage points below the TIIE interbank rate. The issuances were part of a 10bn peso debt program. Proceeds from the sales will fund the upgrade of infrastructure as well as refinancing debt.
Category: Regions
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EM Investors Prefer LatAm
LatAm was voted the most popular region for investors in emerging markets in April in a poll conducted by Merrill Lynch. In March, Asia was the preferred region and EMEA came in third place, as it had in the past three months. Within the BRIC category, Brazil was the most popular destination by a long shot, with 50 points versus the 5 garnered by Russia and China and minus 71 received by India.
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Crédito y Casa to Reopen Borhis Issue
Mexican finance company Crédito y Casa is to reopen its residential mortgage-backed securities (Borhis) issue for a second time. It reopened the issue in March to sell 183 UDIs of the inflation-linked paper. This time around the finance company is looking to raise 234 UFIs to take the total outstanding in the market to $309 million (896 UFIs). The securities mature in March 2034 and yield 4.78% and 6.45% respectively.
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S&P Raises State of Mexico Rating
Standard & Poor’s Ratings Services has raised its national scale rating on the State of Mexico, United Mexican States, to mxBBB- from mxBB+. The outlook remains stable. The State is the second most important economic area outside the federal district. S&P said the upgrade reflects the State’s improved fiscal discipline and transparency of its accounts. “The rating is supported by an ample and diversified economic base and a temporarily funded pension system,” commented S&P analyst Patricia Calvo.
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Ecopetrol Awards Mandates For Privatization
A consortium of JPMorgan, Credit Suisse and Bancolombia has been awarded the mandate to prepare and handle the privatization of Colombia’s largest company, state-run Ecopetrol. Citi and Merrill Lynch have also been appointed to carry out a secondary valuation of the assets. The sale of up to 20% of the oil company is slated for August this year and is being talked of as the country’s “deal of the year”. It is set to become the largest privatization yet by Alvaro Uribe’s administration, with analysts estimating revenue of around $3 billion from the sale. The money raised will be used to fund exploration and increase production.
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Peru’s Intersur to Issue $557 million in Secured Notes
Intersur Concesiones, a Peruvian entity owned by three developers, plans to issue $323 million in 2028 zero coupon bonds and $234 million in 2018 zero coupon bonds to finance the development and concession of toll roads in Peru. The bonds will be issued from vehicles called Interoceanica IV, and are backed by the Peruvian government. Moody’s assigned a Ba3 rating.
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Credit Suisse Starts Axtel at Outperform
Credit Suisse has kicked off coverage of Mexico’s Axtel with an Outperform recommendation on the 2017s and a market perform on the 2013s. “We think the Axtel ’17s offer attractive relative value with improving credit fundamentals, at a yield of 7.5%, whereas the upside on the ’13s will likely be limited by its callability (at 105.5 on 15 December 2008),” says the shop, which underwrote both Axtel deals. Axtel is Mexico’s second largest fixed telephony company with over 800,000 lines in service located across 19 cities as of April 2007, according to Credit Suisse.
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Dresdner Bags Mandates For Demet, Mercantil
Dresdner has won mandates for two small corporate offerings. Demet, a Mexican homebuilder, is heard looking for $100m in 10-year non-call 5 bonds. Banco Mercantil do Brasil is also looking for a similar amount in 5-year senior amortizing notes. Both will roadshow starting in Asia and making up to eight stops in Europe and the US before pricing. This suggests placement with private banking clients, say bankers away from the deal.
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Fitch Sees Colombia Corporate Debt Growth
The private sector is expected to pump out at least COP5.4trn ($2.5bn) in debt this year, up from just over COP4.5trn in 2006, according to Gláucia Calp, senior director at Duff & Phelps de Colombia, an associate of Fitch Ratings. Diminishing needs from the government – COP83.7trn in TES issuance, down from COP85.0trn in 2006 – will leave local investors hungry, says Calp. Fitch estimates that pension funds can absorb close to COL2.7trn in private debt through 2007, and that they will need to buy an additional COP1.5trn in stocks to maintain participation in the portfolio. Calp adds that the COP5.4trn debt issuance figure is very conservative. Markets are still attractive for issuers, but local rates are rising. International investor participation in domestic debt markets is still very limited, says Calp. Fitch sees opportunity in financial institutions, especially as domestic credit starts to grow. It also pinpoints RMBS as mortgage portfolios grow, retail – which is starting to modernize – and telecoms, where mobile penetration is high, but internet use low.
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Merrill Keeps Ecuador Overweight
Despite concerns that the recent referendum strengthens President Correa’s hand, Merrill Lynch has reiterated an overweight on Ecuadorian bonds. “A resounding victory of the ‘yes’ vote does not imply that Correa will have a ‘blank check’ at the Assembly, as the electorate has proven to be very volatile,” says the shop. “The cause of political reforms is likely to keep the government from seeking a debt restructuring. Oil prices continue to support the ability to pay,” it adds. Merrill says that the ensuing political battle will likely keep the government away from debt issues. It adds that Correa and Economy Minister Patiño have moved away from their initial strategy to unilaterally restructure external debt. “The government learned of the difficulties of restructuring the debt . . . [and] opted to pick its battles and give priority to the political reform,” says Merrill. However, it warns of a likely agitated political process that could extend 12-18 months.