Colombia’s retailer Exito has received $72.4m out of a $90.5m payment it is owed from the sale of Venezuela’s Cativen retailer to the Venezuelan government. Exito expects to receive the last installment of $18.1m in November 2012 which would finalize the transaction. Exito officials could not immediately be reached for comment. The payments to Exito stem from French retailer Casino’s decision in November 2010 to sell an 80.1% stake in Cativen to the Venezuelan government for $690m. The sale included Exito’s 28.6% holding in the company. As part of the deal with the government, Casino retained 19.9% to provide operational support. The deal involved a 60% upfront payment to Casino upon the closing of the deal, with 20% paid in cash and 40% in two dollar denominated promissory notes maturing in Nov 30 2010 and Nov 30 2011.
Category: Venezuela
PDVSA Turns to Chinese Credit to Guarantee Brazil JV
Venezuela’s PDVSA has announced that a $1.5bn credit line will serve as a guarantee for its 30% participation in a joint refinery with Petrobras. This came just a day after the Brazilian oil company agreed to give PDVSA more time to finalize the transaction. Cash and a credit line by the China Development Bank will insure the project’s advance, says PDVSA. A spokesman for the company declined to offer more details. On Thursday, Petrobras announced it had given PDVSA 60 more days to settle its affairs on needed loan guarantees with Brazil’s BNDES to finalize its participation in the $13.36bn project for the Abreu e Lima refinery. The PDVSA statement quotes the company’s president, Rafael Ramirez, saying that it has made the needed money available and “all that is left is for BNDES to do the logistical work” necessary to move forward. Under the terms of the Pernambuco-based refinery, first signed in March 2008, PDVSA would take a 40% stake in the plant and become a main heavy crude supplier for the refinery. The total investment in the plant was originally expected to reach $4bn but now it is estimated at $13.36bn.
Petrobras Gives PDVSA More Time on $13bn JV
Brazilian oil company Petrobras has agreed to extend its deadline for Venezuela’s state oil company PDVSA to finalize its 40% participation in the Abreu e Lima refinery in Pernambuco. The $13bn energy joint venture has often served as a gauge of the strength of relations between the two countries. PDVSA has 60 days starting from December 1 to obtain the required loan guarantees for its share of the project from Brazil’s BNDES, a Petrobras spokesman tells LatinFinance. Under the terms of the deal signed in March 2008, PDVSA would take 40% stake and become a main crude supplier for the plant. The total investment was originally estimated at $4bn but this figure is now estimated at $13.36bn, the spokesman says. The refinery is expected to process Venezuelan heavy crude and to begin processing 230,000 barrels a day in December 2012, based on Petrobras’ estimates. The deal has often become fodder for political controversy on both sides of the deal. President Hugo Chavez has often publicly complained about the slow pace of the transaction, blaming Petrobras executives and at one point denouncing the loan guarantees as unnecessary.
Venezuela to Pay Cemex Cash Compensation
Venezuela’s government plans to pay $600 million to Mexico’s Cemex as compensation for the assets it lost to a nationalization campaign in 2008, with a large portion to be settled using debt issued by state-owned oil company PDVSA. The deal also contemplates paying the company an additional $154m for accounts payable that Cemex subsidiaries owed to its parent at the time, the Mexican cement company says in a statement. As agreed, Venezuela will make an initial payment of $240m in cash and $360m in “various negotiable securities issued by PDVSA,” Cemex adds. Cemex officials could not immediately be reached for comment. It remains unclear what PDVSA instruments the company accepted as payment, what their face value is and what kind of discount the company calculated in accepting the paper. Some analysts that follow the situation believe the company may be receiving shorter maturity paper and may not get the full $360m if it chose to sell that paper immediately. PDVSA’s 2013 bonds, its shortest paper, currently trades at 95, yielding 11.2% as of Thursday. The PDVSA 2014s trade at 78 or at 14.9% on a yield basis. It remains to be seen if Cemex must hold on to the bonds until maturity to get the $360m owed or if it can monetize that amount by selling the instruments sooner. Cemex lost its Venezuelan cement assets in April 2008, when President Hugo Chavez decided to force foreign cement makers into minority partnerships with the government. Lafarge and Holcim went along, but Cemex rejected an original $650m purchase price as too low and took Venezuela to international arbitration through ICSID.
Fitch Lowers Hovensa to BB Minus
Fitch has downgraded Hovensa’s senior secured debt rating to BB minus from BB+, putting its outlook back to stable from negative. Hovensa is a joint venture between Hess and Venezuelan state-owned oil company PDVSA, and operates in the US Virgin Islands. The ratings downgrade affects some $750m of debt, including bonds maturing in 2022 and a senior secured bank revolver. The agency cites high capex requirements and higher-than-expected financial support for the project as reasons for the downgrade “Given weak refining economics and higher capital costs, Fitch believes the project will continue to require liquidity from the its revolving credit facility and working capital support from Hess and PDVSA,” it says.
Pequiven Launches Bond Tender
State-owned Petroquimica de Venezuela (Pequiven) has launched a cash tender offer for any and all of its $238m outstanding 8.29% of 2020 bonds issued by the FertiNitro Finance unit. The petrochemical producer is offering holders $1,049.70 per $1,000 principal plus accrued and unpaid interest if they accept by December 6, and $1,000 if creditors tender after the early bird but before expiration on December 20. Due to scheduled amortization payments, as of the date of this offer there is $952.00 in principal for each $1,000 original principal. Pequiven also notes that holders of approximately 79% of the bonds have entered into a lock-up agreement with Pequiven to tender all of their bonds on or prior to the early tender date.
CAF Prices MXP Bond
Corporacion Andina de Fomento (CAF) has raised MXP1.3bn ($97m) in the Mexican bond market. The regional development bank priced a 10-year UDI-denominated bond at 3.95%, or Udibonos plus+156bp, pricing below a price talk of 4.0%. The issuer opted for a 10-year UDI-denominated over a 3-year floater, becoming the first multilateral to issue with this tenor in inflation-linked UDIs. CAF had planned to issue MXP1bn of the MXP1.5bn for which it was authorized, but later upsized the amount to MXP1.3bn. The bonds are rated AAA on a national scale. CAF last came to market in June when it retapped its 3.75% 2016s for another $500m. BBVA Bancomer was the sole lead on the most recent transaction.
Venezuela Limits Allocations, Supply
By placing about 60% of its new $3bn 2026s among public sector banks, Venezuela is in effect limiting short-term supply damage in the international markets as much of the paper will be drip fed through the country’s FX platform, or Sitme, says Barclays. “…[banks] are expected to sell this bond to the central bank so that it can resell it through the Sitme,” the shop noted Monday after the government released the final results of the transaction. While international investors may be relieved that supply will be limited, the government’s strategy is less positive for Venezuelans which will receive fewer hard currency assets than they might have expected and will suffer from further upward inflation pressures as a result, it added. Public financial entities were allocated 100%, while insurance companies got about 82% of what they bid on. Pricing on the 11.75% bond was set last week at 95 last week. Credit Suisse acted as sole lead manager and coordinating agent along with Evorfinance Mosnarbank.
CAF Returns to Swiss Market
Regional development bank CAF became the sole LatAm issuer to tap the international markets Thursday when it raised CHF125m ($139m) in the Swiss franc market. Upsized from an initial target of CHF100m, the long 5-year bond came at a reoffer price of 100.264 with a 2.75% coupon to yield 2.697% or mid-swaps plus 185bp. CAF has become a frequent issue in this niche market. In January, it reopened its 2.625% of 2015s to raise CHF130m. At the time, the borrower said that pricing came inside its dollar curve after it retapped the bond at 99.791 to yield 2.774%, or mid-swaps plus 140bp.