Paraguay is looking at January 2013 for an anticipated benchmark-size 10-year bond, raising funds to support the power and road sectors, an official at the country’s finance ministry tells LatinFinance. “The plan has to be approved by congress in December, and if all goes as planned, part of the proceeds – at least $200m – would be used to finance Paraguayan state power company Ande, in addition to power and road projects,” he says. An issuance of up to $550m is in the budget. The official says Paraguay has selected banks and lawyers in anticipation of the sale. He declines to disclose names, though Citi took the sovereign to visit fixed-income accounts in New York and Boston in September. Paraguay is rated B1/BB minus. The sovereign has been aiming to return to the international bond markets, though it has said it is not in urgent need of funds. Banco Continental Paraguay paved the way earlier this month, pricing a $200m 8.875% 2017 bond. Paraguay will no doubt also be inspired by the recent success of Ba3/BB minus/BB minus Bolivia, which raised $500m at a 4.875% yield, or UST+306bp, after seeing $4.25bn in demand.
Category: Paraguay
Paraguayan Bank Prices Bond Retry
Banco Continental Paraguay has priced a $200m bond, mirroring the terms it got in an initial attempt to complete an international sale in June. The bank’s debut, and the second-ever issuance from a Paraguayan borrower, drew more than $550m in orders. The Ba3/BB minus 2017 priced at par with an 8.875% coupon to give a yield in line with 8.875%-area guidance that followed low 9.000% whispers. Investors comfortable with the zip code drawn in by the attractive yield and scarcity value. The bank priced a similar sale in June, which the leads elected not to settle due to the impeachment of President Fernando Lugo rattling the markets. With the change in leadership bringing less political instability than initially feared, a return was always in the lender’s plans. This time, the issuer was able to cut short its roadshow, which had been scheduled to run through today. Bank of America Merrill Lynch managed the sale, the second ever from a Paraguayan, according to Dealogic data. BBVA Paraguay raised a $100m 2016 in February 2011. The sovereign is also considering its first foray into the international markets, having met investors on a 2-day roadshow last month.
Continental Paraguay Reattempts Bond
After seeing a successful sale derailed by a presidential impeachment in June, Banco Continental Paraguay is planning another try for an international bond. The Ba3/BBB minus lender has scheduled investor meetings starting Monday in Chile, and visiting Los Angeles and New York before finishing in Switzerland October 11. A 5-year dollar bond transaction could follow, according to sources familiar with the plans, targeting a yield in the low 9% range. Bank of America Merrill Lynch is managing. Continental priced a $200m 8.875% 2017 bond at par in June, getting $450m in demand, through opted not to settle due to the impeachment of President Fernando Lugo rattling the market. BAML and Citi managed that sale, which the Paraguayan bank had indicated at the time it would retry.
Paraguay to Engage Buyside
Paraguay is taking advantage of supportive market conditions to meet bond investors during a 2-day roadshow this week, according to investors familiar with the plans. The sovereign is scheduled to visit fixed-income accounts in New York Thursday and Boston Friday. Citi is managing the process. The sovereign has been aiming to return to the international bond markets, with government officials having told LatinFinance that an issue is a long-term goal, though the government is not in urgent need of funds. The government has also said it would also prefer to wait until receiving an investment-grade rating. Paraguay is rated B1/BB minus. The country’s banks have recently approached the bond markets. Banco Continental Paraguay priced a $200m 8.875% 2017 bond in June to some $450m in demand, though decided not to settle the deal after the impeachment of President Fernando Lugo worried the market. In 2011, BBVA Paraguay sold a $100m 3-year bond at a 9.75% yield. The region’s sovereigns have seen well-bid sales this month, with Colombia raising $559m-equivalent in peso-denominated bonds last week and Brazil selling $2.5bn in 2023 bonds. Also, Chile has registered a debt shelf of up to $1.7bn, according to the SEC, though there were no details regarding a specific upcoming transaction. Proceeds are earmarked for the sovereign’s general budget purposes. Chile last issued in the cross-border markets in September 2011, selling $1bn in 2021 bonds and $350m-equivalent in reopened peso-denominated 2020 bonds, through Deutsche Bank and HSBC.
Oil Co Enters Paraguay Farm-in
UK-based President Petroleum has agreed to a farm-in agreement for two blocks in the Chaco region of Paraguay, at an expected total investment of $90m-$100m. The agreement allows for President to earn up to a 59% interest in the Pirity Block from Pirity Hidrocarburos, a subsidiary of PetroVictory, and up to a 60% interest in the Demattei Block from Crescent Global Oil Paraguay. President’s initial payment is funded through a $37m-equivalent private share offering managed by RBC and Jefferies, plus additional equity and a $15m revolving credit facility.
PE Group Plots Paraguay E&P Listing
After combining three of its Paraguayan E&P units into a single entity, private equity firm Dahava Group plans to raise as much as $300m through listings on the Asuncion and London stock exchanges, it says. The firm’s local Dahava Petroleos vehicle holds the Aurora Petroleos, Boreal Petroleos and CDS Energy units, which it has bought over the last two years, spending more than $100m, according to a company official. After proving the units’ reserves, it now plans to raise up to $100m on the Paraguayan bolsa, hiring Valores to manage, and up to $200m on London’s AIM market, via Strand Hanson. The group says the oil assets should help make Paraguay energy independent. Dahava also owns two diamond mines and a black jade operation, as well as oil and gas concessions in Southern Africa.
Millicom Buys in Paraguay (1)
Luxembourg-based telecom Millicom International Cellular has agreed to acquire Cablevision Paraguay for $150m, it says. The buy accelerates growth in Millicom’s fixed broadband services, says a person familiar with the deal, noting that CableVision Paraguay provides television and some fixed cable services to about 470,000 households in the country’s capital. Cablevision, meanwhile, is analyzing investment alternatives for the use of funds. Millicom declined to disclose its advisors. Cablevision worked with Saenz Valiente & Asociados, Errecondo, Salaverri, Dellatorre, Gonzalez y Burgio, as well as with Estudio Caniza in Paraguay. The deal is expected to close this year, subject to approvals.
Continental Paraguay Pulls Bond on Political Concern
Banco Continental Paraguay has decided against settlement of its $200m 2017 bond priced last week, after the impeachment of President Fernando Lugo caused a secondary market slide. The 8.875% coupon bonds, priced at par last week, were trading at 93.00-94.00 before news broke of the cancellation. “The cancellation is due to a decision by the bookrunners. We will wait until the market settles to revisit the international bond market. The deal was pulled because of political aspects and not because of the financial viability of the bank,” CFO Eduardo Cespedes tells LatinFinance. The official says the bank could revisit the bond market within a few months. S&P placed ratings of multiple Paraguayan banks on credit watch with negative implications, including Continental’s BB minus mark, following a similar rating action on the Republic of Paraguay. “The credit watch listing follows President Fernando Lugo’s recent impeachment and reflects the rising credit risks resulting from the possible political and economic ramifications of the abrupt change in government and the exit of Finance Minister Dionisio Borda,” the agency says.
Paraguay on Negative Watch: S&P
S&P has placed Paraguay’s BB minus rating on CreditWatch negative, it says, following the impeachment of President Fernando Lugo last week. The move “reflects the rising credit risks due to the possible political and economic ramifications of the abrupt change in government, and the exit of key economic officials in the government – specifically Finance Minister Dionisio Borda and Jorge Corvalan, president of the central bank,” the agency says. In addition, Paraguay’s main trading partners, Argentina and Brazil, have threatened economic sanctions that, if put in place, would damage economic prospects and lead to worsening fiscal and external indicators. S&P expects to make a judgment on the rating within 3 months.
Paraguayan Bank Sidesteps Volatility
Banco Continental Paraguay has priced a $200m 2017 bond, representing the bank’s debut in the international bond market, and the first high-yield corporate issuance from LatAm since Peru’s Ajecorp last month. Whether the deal indicates a true reopening for LatAm high-yield has yet to be seen, but scarcity value and a $450m book allowed the senior unsecured deal to price amid continued uncertainty in the market. Starting at 9%-area guidance, Continental tightened to 8.875% before pricing the Ba3/BB minus bond at par with a 8.875% coupon. The new bond was trading up 0.375 points in the grey Wednesday afternoon, according to a trader. There is some scarcity value and juice there,” says an investor following the trade. “The deal shows that there is appetite for non-investment grade names, and that the market is still open,” says a banker following the deal. The issuer was being comped against BBVA Paraguay’s (B+/Ba3/BB minus) 2016, which recently traded in the mid-7% range. “The deal was important for the bank and for the country as Banco Continental Paraguay looks to improve its credit rating and return to the debt capital markets in the future,” says a source close to management. Proceeds will be used to fund medium and long-term loans to customers and for general corporate purposes. North American buyers took 53% of the sale, Europeans 16%, LatAm accounts 15%, and Asia and other regions 13%. The transaction was heard backed by reverse inquiry from the US, and follows a roadshow in Europe, Latin America and the US. Bank of America Merrill Lynch and Citi managed the sale. Banco Continental services the agribusiness, industrial, commercial and services sectors, and is the second-largest financial institution in Paraguay in terms of net income, total deposits and shareholder’s equity, and third-largest in terms of total assets. The International Finance Corporation (IFC) owns 15.73% of the bank.