Corporacion Andina de Fomento (CAF) has emerged with a $407m retap of its 2022 bond, seeing total demand of $1.23bn and clinching a tight price. The Aa3/A+/A+ regional development bank reopened the 4.375% coupon bonds at 107.907 to yield 3.412%, or UST+160bp, at the tight end of 165bp-area (+/-5bp) guidance that followed earlier 170bp price thoughts. Investors looking at the deal report that frequent issuer gave up very little in the trade. “We like the strong credit, but we did not like the [lack of] premium to the existing 2022s. They have to give us a little something,” says a portfolio manager following the sale who saw the 2022 bond trading at T+170bp. An official at the issuer notes a concession “flat to slightly inside” secondary levels. Repeating a common theme in DCM deals this year, investors say the issuer is able to achieve such a stingy pricing level due to the amount of excess cash they have to be put to work. Proceeds from the issuance are mainly to be used for budgetary purposes. Deutsche Bank, Goldman Sachs and HSBC managed the transaction. The sale brings the total outstanding size to $1.5bn. The notes were originally sold in June at a UST+282.5bp yield, part of a $600m cash sale that came along side an offer to holders to exchange CAF’s 2019 bonds for the 2022s. CAF also took advantage of a rating upgrade last month to raise CHF300m ($313m) in the Swiss market. CAF officials said at the time of the Swiss trade that the lender continues to analyze the USD, EUR, GBP and JPY markets, and does not rule out another CHF transaction before the end of the year. Elsewhere in the DCM, Colombia’s Coltel is scheduled to end a roadshow today, and BTG Pactual is meeting accounts through tomorrow, ahead of what is expected to be a 10-year Tier 2 sale.
Category: Venezuela
CAF Eyes Sterling, USD
Regional development bank Corporacion Andina de Fomento (CAF) is heard considering a return to the dollar or sterling markets, according to a buyside source who was briefed on the multilateral lender’s plans. The supranational is heard considering a new 10-year USD in addition to gauging fixed-income investor appetite for a new sterling issue. “If they issue in sterling, CAF will probably have to pay another 15bp over the fair basis swaps level to get a transaction in sterling as there is an illiquidity premium attached to sterling issues though it is a high quality single A,” says the investor. Deutsche Bank is one of the banks heard working with CAF on the process. Bankers away from the process say that while CAF’s dollar bonds are performing well in the secondary – its 2022 bonds were trading at 3.30% Monday afternoon – it makes sense for CAF to diversify its investor base even if it has to pay up. “Sure the sterling market is more expensive than the dollar markets, but CAF can’t continue issuing in USD. It behooves them to look at other currencies even at a bit more of a cost,” says one banker. CAF took advantage of a recent ratings upgrade to raise CHF300m ($313m) in the Swiss market in early August. The multilateral lender’s director for financial policies and international issues, Gabriel Felpeto, told LatinFinance last month that CAF continues to analyze the USD, EUR, GBP and JPY markets, and did not rule out more CHF bonds before the end of 2012 as it seeks to diversify its funding sources. CAF is rated Aa3/A+/A+.
CAF Returns to Switzerland
Regional development bank Corporacion Andina de Fomento (CAF) took advantage of a recent rating upgrade to raise CHF300m ($313m) in its third visit to the Swiss market this year. The Venezuela-based lender’s 2018 bond represented its largest-ever size and longest-ever tenor in CHF. The bond priced at 99.954 with a 1.500% coupon to yield 1.508%, or MS+105bp, in line with 105bp guidance which followed 105bp-110bp whispers. “Following a Moody’s upgrade to Aa3, we were put in a whole new category and attracted a new investor base that previously could not participate in single A transactions,” Gabriel Felpeto, the multilateral lender’s director for financial policies and international issues, tells LatinFinance. As a result, Felpeto says, 30% of the transaction size was driven by new investors allowing the multilateral lender to upsize to CHF300m from CHF250m. Felpeto says CAF priced 5bp-10bp inside its dollar curve. It saw demand from 60 accounts, with 80% of demand comprising a mix of banks, asset managers and insurance companies. CAF’s seventh CHF transaction to date, the 2018 fits nicely within CAF’s CHF maturity profile following a series of issuances ranging with tenors of 2-5 years, Felpeto adds. Credit Suisse managed the transaction. CAF continues to analyze the USD, EUR, GBP and JPY markets, and does not rule out another CHF before the end of the year. CAF is rated A+/Aa3/A+.
CAF Gets Asian Loan
Corporacion Andina de Fomento (CAF) has closed a $113m syndicated loan, it says, done through a group of Asian banks. The 3.5-year bullet loan pays Libor+97.5bp and was arranged by Mizuho and Bank of Taiwan, with participation from the Export-Import Bank of the Republic of China and the Land Bank of Taiwan. The loan comes as part of CAF’s strategy of expanding its investor base in the loan market and particularly into Asia, says a person familiar with the company’s plans. CAF could also look to tap the market again at the end of this year or next and expand its base to potentially include banks from Hong Kong. In July, Moody’s upgraded CAF to Aa3 from A1. CAF also has a AA minus rating from Japan Credit Rating Agency.
Chevron to Provide Loan for Vene JV
PDVSA and Chevron have agreed to terms for a $2bn financing for their Petroboscan joint venture, PDVSA says. The US oil producer is providing “long-term” loan at a rate of Libor+4.5%. It does not state the exact tenor, but says the last payment is scheduled for 2025. Petroboscan, operated by the two since 2006, plans to use the proceeds for increasing oil production in the Boscan oil field. The parties involved did not respond to request for additional comment.
Chavez Looks to Raise Debt Ceiling
Venezuela’s government hassent congress a bill to raise the country’s debt ceiling of 37%, or VEB30bn ($6.9bn), according to local news reports citing remarks from government officials. “It has become customary for the government to raise the debt ceiling at this time of the year. Although in our view, most if not all of the additional debt will be issued locally, the possibility of USD denominated debt issuance cannot be ruled out,” Citi says in a report.
CAF Gets Ratings Lift
Moody’s has upgraded Corporacion Andina de Fomento (CAF) to Aa3 from A1, it says. The agency highlights CAF’s broadening membership and improved member credit quality, stronger capital adequacy ratios, enhanced risk management capabilities and increased loan portfolio diversification.The outlook is stable.
US E&P Exits Vene
Harvest Natural Resources has agreed to sell its 32% stake in a Venezuelan oil exploration project to Indonesia’s PT Pertamina for $725m, it says. The all-cash sale concludes a process that the US-based oil company had initiated in March. In the deal, PT Pertamina acquires the stake in the Petrodelta project, of which PDVSA is a partner, by buying Harvest’s 80% stake in Harvest-Vinccler Dutch Holding BV. Net proceeds are expected to be $525m. The transaction is subject to government approval in Venezuela and Indonesia, as well as by shareholders. The boards of Harvest and Pertamina have each approved the transaction. As of end 2011, the Petrodelta venture controls roughly 194m barrels of oil in 3P reserves, a combination of proved, probable and possible reserves held underground, a 1% decline from 2010, following Harvest’s reserve review.
CAF Jumps through Issuance Window
CAF took advantage of a market rally to print a new $600m bond Thursday, the first step in a liability management operation. In a deal following Swiss and Hong Kong issuance last week, the A1/A+/A+ Andean multilateral drew more than $2bn in orders, and got a tiny new issue premium. “The timing was perfect and resulted in a good transaction,” CFO Hugo Sarmiento tells LatinFinance, noting that the sovereign saw a window of opportunity amid recent volatility, for what is typically its annual visit to the dollar market. The 2022 bond priced at 99.225, with a 4.375% coupon, to yield 4.472% or UST+282.5bp, at the tight end of 287.5-area guidance, which followed 300bp talk. “It was too tight at 10bp-15bp on top of the 2019s.This is a credit that is liked and bought by insurance companies, which don’t mind the flatter curve,” says a West Coast EM portfolio manager. Sarmiento says CAF offered zero to little new issue premium, after spotting the 2019 bonds at UST+270bp on an interpolated basis and adding 20bp for the curve extension from 7 to 10 years. Demand was heard driven by US institutional accounts (50%), with participation from Europe (30%) and Asia and Latin America (20%). A total of 138 accounts participated, including institutions, private banking, retail and insurance. At the same time, CAF has launched an offer to exchange its existing 8.125% 2019 and 5.750% 2017 bonds for more of the newly issued 2022 bonds. Accepting holders are to get $1,278 for each $1,000 tendered of the 2019s and $1,135.91 for each $1,000 of the 2017s, in an offer closing Tuesday. Deutsche Bank, Goldman Sachs and HSBC managed the bond sale and are handling the exchange offer. Last week, CAF issued a CHF175m ($180m) 2.5-year floating-rate bond at par with a coupon of 3-month Libor+145bp, through Credit Suisse. It also tapped the Hong Kong market for HKD398m ($51m) in 12-year bonds priced at par with a 4.00% coupon, via Goldman Sachs.
CAF Continues Diverse Funding Amid Volatility
Regional development bank CAF has landed bond transactions in Switzerland and Hong Kong. The Andean development bank issued a CHF175m ($180m) 2.5-year floating-rate bond at par with a coupon of 3-month Libor+145bp. The price represents a 20bp increase from its last issuance, of CHF125m in February. CAF CFO Hugo Sarmiento tells LatinFinance that while spreads have widened due to volatility, the conservative Swiss market is open to a few select issuers, and represents geographic and investor diversification. Credit Suisse managed. A1/A+/A+ rated CAF also tapped the Hong Kong dollar market, for HKD398m ($51m). The 12-year bond priced at par with a 4.00% coupon. Goldman Sachs led that transaction. The two transactions follow a $50m-equivalent 30-year note issuance in the Taiwanese market in April.