Category: Peru

After securing last year the international borrowing needed to fund 2010, Peru could return to international markets to pre-finance 2011, the finance ministry says. It would do so “anticipating potential turbulence in an election year.” The sovereign adds that it would consider issuing in a currency other than dollars if the cost was significantly more attractive. Peru will hold presidential elections in 2011. As for internal debt, the government plans to sell PES4.12bn this year, including PES2.07bn to finance its needs and the remainder under a special law allowing it to help fund regional governments’ infrastructure projects. It adds that it wants to strengthen domestic benchmarks, and that it will prioritize its 2042, 2031 and 2020 maturities. Last year in the dollar markets, the Baa3/BBB minus issuer sold $1bn in 7.125% of 2019 bonds in March. It reopened $1bn in 7.350% of 2025s in July. Peru filed a $5bn shelf with the SEC last month.

Cofide, Peru’s private-public development bank, has received a second investment grade rating, receiving a BBB minus score from Fitch. In early February, the bank received a BBB minus from S&P. Now that it is equipped with 2 high grade ratings, Cofide is likely planning to issue a bond, speculate DCM bankers familiar with the credit. The state-owned issuer hasn’t issued dollar notes in the past, according to Dealogic. Ratings reports do not detail plans for issuance. Furthermore, bankers say no RFP has been sent out. But Cofide does have outstanding a $185m 3-year step-up loan, raised in June 2008 and it may look to take advantage of favorable bond issuance conditions to refinance the facility. At launch, the loan was scheduled to pay 150.0bp in year 1, 162.5bp in year 2 and 175.0bp in year 3. Standard Chartered and Barclays led that deal, which was upsized from $150m.

In line with market consensus, Peru’s central bank kept its monetary policy rate unchanged at 1.25%, saying inflation, at an annualized rate of 0.44% in January, is below the 1.00% target. Morgan Stanley expects monetary tightening during the second half. Bank of America Merrill Lynch agrees that the rate will stay at 1.25% until H2. It expects annualized inflation to increase to 1.5% by the end of 2010.

Peruvian corporates should be able tap foreign bond investors, according to fishmeal exporter Corporacion Pesquera Inca (Copeinca), which placed last week a well-received $175m 2017 bond. “There had not been a corporate issue from Peru in about 4 years. So perhaps this issue can help other companies take out debt,” Copeinca CFO Eduardo Castro tells LatinFinance. “Investors perceived Peru as a very strong emerging economy,” he adds. Copeinca wanted to refinance a $185m 2012 syndicated loan and the Peru local market is only absorbing $50m-$70m equivalent issues at 3-5 years, says Castro. He adds that it is improving steadily, and should support $100m equivalent deals by 2011. Copeinca is the second largest Peruvian fishmeal producer, a sector that saw a lot of pre-crisis M&A. “Right now we don’t see a lot of opportunity for further acquisitions, given that the prices for fishmeal are very high,” Castro says, noting that his company has spent 2008-2009 digesting prior acquisitions. In Tuesday’s bond deal, Castro notes the markets turned more favorable this week after Greece-driven investor worries dissipated. He says the fishery was pleased with the investor response, and notes that about 20% of the book went to Asia, which was included on the roadshow as about 70% of exports go to that region. US investors bought 50% and European 30%. The BB minus bond priced inside guidance at 9.125%, via Credit Suisse and Santander.

Titulizadora Peruana is presenting investors this week with its first ever mortgage-backed security offering. The deal for up to $35m should price in the next 2 weeks, says Jefferson Ganoza, director of structured finance and risk management at Titulizadora. The 20-year paper, backed by mortgages from BCP and Interbank, has an average life of 9 years and will pay a fixed rate. The bond is dollar-denominated to match the currency of the loans. About 60% of Peru’s $4.5bn mortgage market is dollar denominated, Ganoza says. Subordinated bonds will represent about 6% of the issuance. BCP’s Credibolsa unit and Inteligo are placement agents for the deal, rated AAA on a national scale.

Market consensus is that Peru’s central bank will keep the monetary policy rate at 1.25% today. Morgan Stanley continues to expect the bank will keep the policy interest rate on hold at 1.25% and expects monetary tightening during the second half of this year. Bank of America Merrill Lynch agrees that the rate will stay at 1.25% until the second half of 2010. It expects annual inflation to increase to 1.5% by the end of 2010 from 0.1% at the end of 2009.

Nextel’s Peruvian arm has raised a $130m A/B loan to grow its mobile operations in the country. The deal, which closed over the holiday break, includes a $50m 7-year A loan from FMO, with participation from DEG, at Libor plus 575bp. There is also a B loan paying 475bp for 3 years, 525bp for 5 years and 575bp over Libor for 7 years, via a group of commercial lenders led by Standard Bank. The B loan syndication included participation from several regional lenders, including BCP and Banco BIF, as well as Panama-based Tower Bank, Multibank, Banco Aliado and Global Bank, according to a banker close to the deal. US-based CIFI also participated, as did HSBC in the B portion. The deal began syndication in Q4 last year and wrapped up in the final 2 weeks of 2009.

Peru’s Corporacion Pesquera Inca (Copeinca) is out with 9.5% area guidance on a new bond that is expected to price as soon as today at a size of $150m. The order book on the 7-year NC4 deal is heard oversubscribed, according to investors following it. The exporter of fishmeal and fish oil plans to use proceeds from the BB minus transaction to repay debt. Credit Suisse and Santander are managing the sale.

Peru has filed a shelf with the SEC to sell up to $5bn in debt securities. No details were given as to the first issuance from the program. The Baa3/BBB minus rated sovereign flied a similar $5bn shelf in January 2009, and went on to issue $2bn in the dollar markets last year. Peru sold $1bn in 7.125% of 2019 bonds to yield 7.196% in March through Goldman Sachs and JPMorgan. In July, the sovereign reopened $1bn in 7.350% of 2025s to yield 6.950% through JPMorgan and UBS.

Early price expectations for a debut bond from Peru’s Corporacion Pesquera Inca (Copeinca) are in the mid to high 9%s, according to investors. The fishmeal and fish oil producer is expected to bring a $150m 7-year deal in the middle of next week, following a US, Asian and European road show. Copeinca plans to use proceeds from the BB minus transaction to repay debt. Credit Suisse and Santander are managing the sale.