Peru is set to price Friday its swap targeting almost $4 billion in bonds. The spreads have been locked in as follows: the 8.375% 2016 notes will be priced at 119 basis points over U.S. Treasuries and the 8.75% 2033 notes at 163 basis points, both of which will be issued in exchange for 2012 bonds. The Global 2037 notes, exchangeable for two classes of Brady bonds, will be priced at 175 basis points over. Citi and Deutsche Bank are managing the offering.
Category: Regions
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Peru Sees Increased Local Currency Issuance . . .
Luis Carranza Ugarte, Peru’s finance minister, predicts 2007 issuance of local currency debt could surpass the $700 million outlined in the annual debt management program. “As we conduct our liability management, that amount [of $700 million] could increase possibly twofold,” he told LatinFinance Thursday. Funds from new bonds to be issued in Soles will also be used to reduce the country’s dollar-denominated debt in an effort to cut its foreign currency exposure, as part of Peru’s aggressive liability management strategy. The finance minister also notes that Peru will implement capital markets reforms with a view to increasing competition, developing new financial instruments for small and medium-sized companies as well as mortgage market products.
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Santander Applies For Peru License
Grupo Santander is to join HSBC and Scotiabank in seeking to enter Peru’s banking market by applying for a banking license, according to a report by Reuters, quoting the country’s banking and insurance superintendency. If approved, it will mean a return to Peru by the Spanish bank, which it left in 2002 when it sold its retail and mutual funds business to local Banco de Crédito for $50 million. Santander is seeking a license to offer financial and investment banking services to corporates and other institutions in Peru. HSBC of the UK won approval to start operations in Peru last October. Earlier in the year, Canada’s Scotiabank bought control of Banco Sudamericano and merged it with Banco Wiese, which it had purchased in 2005, to create a new entity in which Scotiabank holds 80%.
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Digicel Prices Jumbo Junk Bond
Digicel, a Jamaica-based wireless provider, priced a $1.4 billion bond tighter than the initial price talk of 9.00%-9.25%. The $1 billion in cash pay bonds, priced at par with an 8.75% coupon, while $400 million in cash or PIK notes, also priced at par, with a 9.125% coupon. Predominantly European and US investors specialized in high-yield and emerging markets placed more than $7 billion in orders for the Caa2/CCC+ (Moody’s/Fitch) issue. A banker close to the deal attributed strong interest to the popularity with investors of Digicel’s owner Denis O’Brien, an Irish entrepreneur. Citi led the deal with JPMorgan as co-lead.
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Peru To Finalize Exchange Today
Peru is set to price today, Thursday, its retap of the 2016 and new 2033 bonds, which are being issued in exchange for a 2012 Global and two classes of Brady bonds. The country’s biggest ever liability management exercise aims to retire $4 billion in outstanding paper. Bids are due at 9am and pricing will be announced at 3pm, according to bankers close to the deal. Citi and Deutsche Bank are the leads.
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Cemex España Nails Down €900m Bond
Cemex’s European asset holding company, Cemex España, has priced an all-European €900 million seven-year bond. The BBB notes were priced at 99.528 with a 4.75% coupon to yield 78.7 basis points over the 4.25% seven-year Bund, or 62 basis points over mid-swaps. More than 200 European investors, including asset managers, insurance companies, bank desks and corporate treasuries, put in orders worth more than €4 billion. BNP Paribas, Bank of America and HSBC led. Proceeds are apparently to be used for refinancing.
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Digicel Launches $1.4bn Buyout Bond
Digicel Group, the Caribbean telecom, will today, Thursday, look to price a $1.4 billion high-yield offering to yield 9.00%-9.25%. The price talk is viewed by some bankers away from the deal as aggressive, given that the company is 9x levered and rated Caa2 by Moody’s. The notes, due 2015 and callable after year 3, are in two tranches: $1 billion in cash pay bonds and $400 million in cash or PIK notes. The roadshow wrapped up its last stop in Los Angeles Wednesday. The targeted investor base is evenly split between high-yield accounts and emerging markets investors. Citi is on the left with JPMorgan as joint lead. Digicel is based in Jamaica and run by Irish entrepreneur Denis O’Brien.
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Mexico FDI Totals $19 Billion In 2006
Foreign investors brought $18.94 billion into Mexico last year, according to government figures, a rise of 6.4% over FDI in 2005. New investment accounted for 40%, or $7.54 billion; company transfers for 25% ($4.75 billion); reinvestment of profits totaled 19% ($3.63 billion) and imports for capital investment amounted to $3.02 billion, or 16%. The largest investor was the US, which contributed just over two-thirds of total investments, with the Netherlands, France, the UK and Spain together accounting for just under a quarter. Manufacturing industries attracted 61% of investment, while services pulled in 32%.
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Satmex Hangs Out The Sign
Mexican satellite operator Satélites Mexicanos (Satmex), which successfully restructured itself last year to position the company as a target in the consolidating satellite communications sector, says it will open its books to potential investors next month and expects to receive bids by mid-April. The company appointed Morgan Stanley at the end of last year to advise on the sale to a strategic buyer. Satmex’s restructuring last year, which has been praised for its fair treatment of foreign creditors, left 78% of the company’s equity in the hands of the debtholders. The remaining 22% is held by the Mexican government (20%) and jointly by local telco Principa and US operator Loral (2%).
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LatAm, Caribbean Sovereigns To Increase Borrowing
Gross long-term borrowing by 25 Latin American and Caribbean sovereigns should grow to $427 billion this year, up a modest 5%-6% on last year, according to the third annual debt issuance survey conducted by ratings agency Standard & Poor’s. The report also highlights the declining role of official sector funding as sovereigns increasingly access the markets directly to issue debt. Moreover, “Gross official lending (from both bilateral and multilateral lenders) to regional sovereigns is likely to total only US$17 billion in 2007. Around 96% of government borrowing in 2007 should originate with local and external commercial sources, similar to the level in 2006,” continues the report. Brazil will once more be the region’s largest sovereign borrower.