Fitch has placed Sidetur on rating watch negative. The announcement follows the announcement Sunday by the Venezuelan government that it would nationalize the steel company. Fitch rates Sidetur’s $100m 10% senior unsecured notes due 2016 issued through its wholly-owned subsidiary Sidetur Finance. The negative watch reflects the uncertainty regarding the exact time by which the nationalization will be completed and its impact on the company’s operations during this process. This uncertainty will negatively affect labor productivity and the fluidity of day-to-day relationships with the company’s suppliers, customers and banking institutions that provide it with working capital financing.
Category: Venezuela
Posted inMagazine
China Latin America Links Proliferate
Cultural barriers remain, but the China-LatAm relationship is starting to blossom. Both sides hope to convert dialogue into more frequent large transactions.
Posted inMagazine
Best Bank – Venezuela
Mercantil Banco Universal has been expanding its loan portfolio, which has led to year-on-year growth despite a economic contraction and slow liquidity growth in Venezuela.
Posted inMagazine
Best Multilateral
Corporación Andina de Fomento (CAF) may be 40 this year, but it shows no signs of slowing.
Posted inDaily Brief
Venezuela, DR Snag IDB Loans
The IDB has approved a $700m loan to finance the modernization of the turbines of Venezuela’s Guri hydroelectric project, increasing power by 795MW. Venezuela will contribute a total of $609m in counterpart funds to the project, which will have a total cost around $1.3bn. The IDB loan is for 20 years, with a 6-year grace period and an interest rate based on Libor. Separately, the IDB has approved a $120m loan to the Dominican Republic to help enhance competitiveness. The IDB financing consists of a $110m loan with an amortization of 20 years, a grace period of 5 years and an interest rate based on Libor. The other $10m loan has an amortization of 15 years, a grace period of 5 years and an interest rate based on Libor. The multilateral does not comment on the loan spreads.
Posted inDaily Brief
Chavez Nationalizes Owens-Illinois
Venezuelan president Hugo Chavez announced he will nationalize the local operations of US-based glass packaging maker Owens-Illinois, but the company says it has not heard directly from the Venezuelan government. It adds that these operations account for under 5% of its global segment operating profit. The operations include 2 plants that employ more than 1,000 people.
Posted inDaily Brief
PDVSA Sells $3bn Bond
PDVSA says it has issued $3bn in new 2017 bonds, getting nearly $7bn in demand from 105,307 orders. The B+ 8.5% bond priced at par. As with previous government offerings, the offer is directed at individuals and businesses with the “sector productivo nacional,” what Venezuela calls businesses that are strategically important the nation’s economy and investors will be allowed to buy the dollar-denominated bonds with Bolivars at a VEB4.30 per dollar rate. Separately, PDVSA will offer holders of its 0% 2011 bond new 8% of 2013 bonds at an exchange rate of $1,125 per $1,000 if done by October 28, and $1,095 per $1,000 if done later. Citi ran the new issue and is managing the liability management.
Posted inDaily Brief
Fitch Studies FertiNitro Nationalization Impact
FertiNitro Finance’s nationalization by the Venezuelan government does not trigger an immediate acceleration of debt, Fitch says. The agency, which has a CCC (negative) rating on the company’s $250m 2020 bonds, says the company has always honored debt obligations, but that after the nationalization, the status of debt obligations is unclear. FertiNitro says that Pequiven, the state-owned company of which it is now a subsidiary, intends to support its debt obligations, but Fitch says details of such support are unclear. The agency does say, however, that the government of Venezuela has not prevented payment of debt obligations of strategically important nationalized companies.
Posted inDaily Brief
Correction: PDVSA Launches Bond Sale, Swap
An October 19 daily brief entitled “PDVSA Launches Bond Sale, Swap” incorrectly states the coupon on a bond and the exchange price offered to holders. It is a 0% 2011 bond, and holders will receive $1,095 per $1,000 if participating after the October 28 early acceptance date.
Posted inDaily Brief
BP Sells Vene Assets
UK-based oil company BP confirmed yesterday that it is selling assets in Venezuela and Vietnam to Russian peer TNK-BP for $1.8bn. BP also declined to comment on the potential value of those assets, though they have been estimated at $1bn, according to an industry banker not associated with the deal. In Venezuela, TNK-BP, a 50/50 joint venture between BP and several Russian businessmen, says it will acquire from BP a 16.7% equity stake in the PetroMonagas extra heavy oil producer, a 40.0% stake in Petroperija, which operates the DZO field, and a 26.7% stake in Boqueron. These assets operate as joint ventures with PVDSA and have a combined capacity of 25 thousand barrels of oil equivalent per day. The buyer says the acquisitions will be financed through cash on hand and will not require additional capital from the shareholders of TNK-BP. A deposit of $1bn will be made by October 29, with final payment upon completion. Goldman Sachs and HSBC acted as BP’s financial advisors, says a company spokesman, while TNK-BP’s board was advised by Lexicon Partners and management by Credit Suisse.