Category: Peru

Peru’s Corporacion Pesquera Inca (Copeinca) is set to begin marketing Wednesday a $150m bond that would be its first in the international markets. The fishery will visit Asia, the US and Europe this week and next, and is looking at a 7-year deal, according to a banker on the transaction. Credit Suisse and Santander are managing the sale. Copeinca plans to use proceeds for repaying debt. In a report assigning a BB minus rating, Fitch notes Copeinca’s strong market position, adequate leverage levels, and positive free cash flow generation. As of September, the net debt/Ebitda ratio was 2.1x, down from 2.4x in 2008. LTM Ebitda was $63.0m and total debt was $152.2m, composed mostly of a $135m syndicated loan. Fitch notes that the rating is constrained by product and client concentration, vulnerability to weather changes, price volatility and an aggressive growth strategy. Copeinca is expected to continue with its growth strategy and to manage to its leverage ratio target in the range of 2.0x to 2.5x, adds Fitch. Copeinca has become the third largest producer of fishmeal in the world and second largest in Peru, Fitch says, on the back of nearly $400m in acquisitions in the past few years. It borrowed $185m in 2007 through a 5-year loan arranged by Credit Suisse, BBVA, WestLB and Glitnir. “The proposed $150m notes issuance will increase the company’s financial flexibility as it extends its maturity profile to 7 years. Also, the company continues to have access to the local capital markets supported by its fishing licenses,” adds the agency.

As expected, Peru’s central bank says it has left the monetary policy rate on hold at 1.25%, citing dropping inflation rates. The bank says that inflation in December was 0.25% and that it expects it to decline further.

Zinc and copper miner Antamina has approved a $1.288bn expansion plan, which it expects will be the biggest private investment in Peru this year. Spokesman Gonzalo Quijandria tells LatinFinance that all of the financing will come from Antamina’s 4 shareholders. They are BHP Billiton and Xstrata, each with a 33.75% stake, Teck (22.50%) and Mitsubishi (10.00%). Proceeds will be used to boost production by 38%, increase reserves 77% and extend the mine life by 6 years. The mine is in San Marcos district in Huari province. “This expansion represents the biggest private investment that will happen in Peru in 2010, demonstrating the confidence that Antamina has in the country,” says the investor.

Moody’s has raised Peru’s credit rating to Baa3 from Ba1, becoming the third agency to assign an investment-grade rating to the sovereign, more than a year after S&P and Fitch. “As with other sovereigns that have been recently upgraded, the decision to raise Peru’s foreign currency ratings was driven by indications of increased shock-absorption capacity relative to similar or higher-rated sovereigns,” Moody’s says, calling the country an “ordinal winner” during the crisis. The agency lauds Peruvian authorities’ ability to employ counter-cyclical policies during the turmoil and the government’s fiscal flexibility. The remaining risks come from political events and a per capita income that compares unfavorably with that of other Baa-rated countries, Moody’s says. Fitch gave Peru its BBB minus mark in April 2008, with S&P following three months later.

In line with expectations, Peru’s central bank has kept the monetary policy rate unchanged at 1.25%, citing a continued reduction in inflation, which was minus 0.11 in the month of November. According to the research arm of Peruvian bank BCP, inflation in Peru will be just 0.5% in 2009. It expects inflation to be 2.1% in 2010.

Morgan Stanley, in line with market consensus, says that with inflation still soft and economic activity just stabilizing, Peruvian authorities will keep rates on hold at 1.25% today. Bank of America Merrill Lynch agrees, saying that the central bank is likely to stick as 12-month inflation trends very low at 0.29% year-on-year in November.

A Peruvian unit of Spanish concessionaire Abengoa has raised a $78m 7-year loan with a group of banks to help it build and operate a 5-stretch 650km transmission line in central and northern Peru. The financing for the Carhuamayo – Carhuaquero project was priced at around 500bp over Libor, according to an executive close to the process, and includes a balloon feature whereby close to 70% of the principal amortizes in year 7. The deal includes close to 1 year of remaining construction, with the ensuing 6 years making up the post-completion period. The debt represents only 30% of the $260m total investment for the project. WestLB and BNP Paribas led the deal, with SocGen, Peru’s BCP, Scotia and HSBC also participating.

Peru LNG, the sponsor building a giant LNG liquefaction terminal in Pampa Melchorita, Peru, has sold $200m in bonds across 4 tranches on the local market in what lead banks are calling Peru’s largest domestic bond in 5 years. The bulk of the deal involved $135.3m of 15-year bonds featuring an average life of 7.3 years and a 5-year grace period, paying 6-month Libor plus 3.656%. It also sold $10m in 2.5-year bullet bonds paying 3.438%, $30m in 5-year amortizing bonds with a 2.7-year average life paying 4.656%, and $24.7m of the same15-year bonds, but paying a fixed rate of 7.156%. Total demand topped $560m, including $342m for the Libor tranche, according to a statement from sole manager Banco de Credito de Peru. “The [deal] included an innovative placement mechanism designed by BCP that consolidated the books for tranches 3 and 4, thus increasing competition in the longer segment of the bonds, especially between the two largest investor groups: private pension funds and life insurance companies,” says BCP in a statement. The $3.9bn Peru LNG project is the largest ever infrastructure undertaking carried out in Peru, and is expected to start operations in June 2010. Sponsors Hunt Oil, SK Energy, Repsol YPF and Marubeni had previously funded it with equity and $1.25bn in loans from development and commercial banks signed in 2008.

Peru LNG plans to sell up to $200m equivalent in bonds today on the local market. The consortium controlling the under-construction LNG liquefaction terminal 200km south of Lima can sell up to $10m in 2012s, up to $40m in 2014s, and up to $160m in 2024s, all paying fixed rates, as well as up to $160m in 2024 notes paying a spread to Libor. The bonds can be sold in dollars or soles, and the total across the tranches cannot exceed $200m. BCP is managing the sale, rated AAA on a national scale. The Peru LNG consortium is made up of Hunt Oil, SK Energy, Repsol YPF and Marubeni. The $3.90bn project has to date been financed with sponsor equity and $1.25bn in loans from development and commercial banks singed in 2008. The terminal is expected to start operations next year.

The World Bank has approved a $150m loan for Peru to help the country cover its financing needs, improve the effectiveness of its fiscal management and enhance competitiveness. Terms on the loan include a fixed rate over Libor, a 21-year maturity period and an 8-year grace period.