Cabei has raised CHF150m through its first bond sale in Swiss francs. Cabei priced the 2013 bond at 100.440 with a 2.250% coupon to yield 2.235%, or mid-swaps plus 150bp, tight to 155bp guidance. “Given the current market conditions, this was a successful transaction,” Felix Magana, treasurer of Cabei tells LatinFinance. He adds that this is consistent with the bank’s long-term strategy to diversify and grow its investor base. Credit Suisse managed the transaction, rated A minus/A2. Cabei will seek to issue before the end of the year in a Central American market, he says, but has not decided on which yet. Last month it raised CRC11bn ($21.6m) in 7-year bonds in Costa Rica’s local market. Cabei plans to return to Asia in the early part of next year, Magana says, likely revisiting one or more of the markets it has issued in previously, which include Japan, Hong Kong, Taiwan, Thailand and Singapore. It has been a tricky week for Latin issuers, with banks including Banco BVA and Bradesco postponing deals. The market was still waiting for word as to whether Andean multilateral CAF would proceed with a euro-denominated transaction.
Category: Structured Finance
Tariffs Hinder India/LatAm Investment
Tariffs between LatAm and India are hindering trade, according to a study by the IDB. India represents only 1% of the region’s overall trade, compared to 10% with China. Reducing tariffs on Indian imports by just 10% would likely increase imports of Indian goods into Chile and Argentina by as much as 36%, the IDB says. India’s average tariff on LatAm agricultural goods is 65%, more than 5 times China’s 12.5% tariff, says the IDB. Even though Latin American tariffs on Indian goods are not as high – reaching 9.8% in the case of manufactured products – they are well above the 4% to 6% OECD range, the study said. A 10% reduction in average tariffs (i.e., reducing a 6% tariff on a good by 0.6%) imposed on Indian products, for example, would likely increase imports of Indian goods by 36% in Chile and Argentina. Cutting transportation costs will also boost trade. A 10% reduction in shipping costs would likely increase trade between Chile and Argentina by 46% and 47%, respectively, according to the IDB. High trade costs are also preventing LatAm from reaping full benefits from its current trade with India and undermining the flow of investments between the 2 regions. Today a 1% growth in China’s gross domestic product generates a 2.4% increase in this region’s exports to China. Meanwhile, a 1% rise in India’s GDP yields just a 1.3% growth in the region’s sales to the country. The study also finds that India could be a significant competitor with LatAm countries. In terms of low-technology goods, India has been boosting exports of textiles and apparel. It has now 3% of the U.S. market for these goods, which is twice that of Brazil’s (1.5%), higher than Central America’s (2.4%), and fast approaching Mexico’s dwindling share (7%).
Brazil’s BIC Pulls Local Debt
Brazilian leasing company BIC Leasing says it is halting a planned BRL200m bond issue, citing market conditions. The company will decide whether to resubmit the issue for regulatory approval in 60 days. HSBC and Itau were joint leads. Proceeds were to be used for new leasing business. The notes, were to be issued in a single tranche and pay up to 17% over the DI rate. Moody’s has assigned it a Ba1 global local currency subordinated debt rating and a Brazilian national scale debt rating of Aa2. Fallout from Banco Panamericano’s regulatory troubles has forced Banco BVA to postpone a 2013 bond it had begun marketing last week, according to investors. Concerns over the mid-sized Brazilian bank are casting a bad light over the entire sector.
Panamericano Quashes BVA Bond
Fallout from Banco Panamericano’s regulatory troubles has forced Banco BVA to postpone a 2013 bond it had begun marketing last week, according to investors. Concerns over the troubled mid-sized Brazilian bank are casting a bad light over the entire sector. BCP Securities and UBS had been managing the B2 rated deal, expected by the market at under $500m. Last week, Panamericano announced it would receive a BRL2.5bn emergency capital injection by its controlling shareholder, Grupo Silvio Santos, following the discovery of “inconsistencies . . . that do not allow the financial statements to reflect the entity’s true state of assets,” according to the bank. Panamericano has since fallen under criminal investigation, according to prosecutors. While so far no accounting irregularities have been found at BVA or any of Panamericano’s other peers, investors have indicated that a repricing may be in order for new dollar issuance from the sector, which had been getting attractive rates from a limited but enthusiastic investor base.
CAF Goes Back to Euros
CAF is set to meet European investors today and tomorrow, with the aim of issuing a euro-denominated bond. No terms have been announced, investors say, noting that BNP and HSBC are managing the process. The Andean multilateral lender sold EUR100m in 2015 floating-rate bonds in February through Goldman Sachs, according to Dealogic, its first euro-denominated deal since a EUR300m 2006 offer.
Nestle Ecuador Launches ABS
Nestle’s Ecuador unit has launched the sale of 3-year and 5-year portions of a $74m domestic bond offer, with a 7-year due next week. “This is a good time to access the market,” Santiago Noboa, Nestle Ecuador CFO, tells LatinFinance. He adds that there is liquidity available from the government pension funds and other local investors. A $20m 3-year 7.25% coupon tranche and a $15m 5-year 7.75% tranche launched Friday, and a $35m 7-year 8.25% piece featuring a 1-year grace period, and a $4m 7-year subordinated slice paying 8.75% will launch at some point next week, he adds. The sale should wrap up in the next 2 weeks, he says. Noboa says the company will aim to sell the bonds at slight premia. The deal is guaranteed by Nestle’s future sales in Ecuador and follows a $70m ABS in 2008. Produbanco is managing the trade, rated AAA.
Nicaragua Wind Project Signs Loan
The Amayo II wind project has closed on a $45m 15-year non-recourse project financing from FMO and Cabei. The facility consists of a $42m senior loan and a $3m mezzanine loan. Senior loan participants include Cabei, FMO, EKF and BIO. The borrower is Consorcio Eolico Amayo (Fase II), a subsidiary of AEI, Centrans Energy Services and Energia Eolica de Nicaragua. The wind project consists of 11 wind turbines capable of producing 23.1 MW of electricity. Output is fully contracted under long-term, 15-year PPAs with local power distribution companies Dissur and Disnorte.
Troubled Panamericano May be Sold
Banco Panamericano could be sold by its controlling shareholder, Grupo Silvio Santos, according to bankers away from the deal. Panamericano, a mid-size Brazilian bank, was rescued last week by Santos with a BRL2.5bn capital injection following the discovery of “inconsistencies . . . that do not allow the financial statements to reflect the entity’s true state of assets,” according to the bank. The bank is now under criminal investigation, the Brazilian federal prosecutor’s Sao Paulo office says. Prosecutors will “investigate eventual crimes related to facts recently reported on Panamericano and to follow the central bank supervision of the financial institution,” the prosecutor says. Fitch says Santos will need to sell assets in order to service a loan it got to fund the emergency injection, which may include its stake in the bank itself, despite statements by the Santos group that it intends to maintain its position. A banker not involved in the situation says several banks are interested in the asset, while the government might not leave the group much choice in the matter. “The central bank is not keen on him retaining his stake,” says the banker, referring to Silvio Santos, head of the group. The banker says the government would take a dim view of Santos’ continued involvement in light of the allegations of fraud that would have occurred under his watch. Regulators will likely want to see new ownership in order to provide a clean slate going forward, he says. Santos may need to sell assets in any event. “Something will have to happen to pay down that loan,” says the banker. A sale would also likely require significant involvement by the government, according to another banker, since strategic investors are unlikely to want to involve themselves with an institution under investigation. The banker says regulators will have to issue guarantees to any potential acquirers that would protect them from future potential liabilities. He says it is unlikely any strategic
Honduras Gets Fiscal Reform Loan
Honduras will receive $45.8m from the IDB to support the country’s fiscal reforms, and improve its tax system and state utility revenues. The financing will consist of a $32.06m, 30-year loan with a 5.50-year grace period and a fixed income rate, and a $13.74m, 40-year loan with a 5.50-year grace period and an annual interest rate of 0.25%.The financing will be disbursed in 2 tranches of $22.9m. The first will come after the approval of a tax reform designed to increase collection rates, efficiency and equity in the tax system. The second tranche will come after the approval of other tax regulations. The country will also enact a law against tax evasion. In addition, the government will take steps to raise the revenues of the state-owned electricity company, Enee, and the telecommunications company, Hondutel.
Panamericano Shareholder Seen Selling Assets
Grupo Silvio Santos will likely need to sell significant assets to repay a BRL2.5bn loan it took to shore up Banco Panamericano, according to Fitch. The comments by the ratings agency are echoed by Henrique Meirelles, president of Brazil’s central bank, who says the holding company may sell off its stake in the Brazilian lender. Santos has issued a statement saying it does not intend to sell its stake in Panamericano, though Fitch points out the holding company has other assets it could sell to pay down the loan. Eike Batista has reportedly said that he would be interested in acquiring assets held by the Santos group. According to Fitch “the sale of significant assets will be necessary for the group to face its financial obligations.” Santos also owns a controlling stake in SBT, a Brazilian television network, along with several other interests. If Santos were to attempt to sell the Panamerican stake, it may need to look outside of Brazil for a buyer. According to a Fitch analyst, several of the larger Brazilian banks already have access to Panamericano’s market, which includes the vehicle, payroll discounted and consumer loans segments. Fitch downgraded Panamericano’s national long-term ratings to A- from AA+ with negative watch.