ICA and Goldman Sachs, which own the concession for the Farac I toll road assets, have raised MXP6.55bn through the issuance of a novel hybrid structure in Mexico. Proceeds are being used to take out a jumbo peso project loan raised in 2007 to acquire the assets. The two have become the first issuer in the newly created certificados de capital de desarollo (CCD) structure. CCDs are certificados burstatiles sold by a trust that holds shares in the Red de Carreteras de Occidente (Farac I) concession, and will be quoted on the Mexican bolsa. A price of MXP77 per CCD was struck with the buyers, exclusively institutional investors, according to ICA, which won the concession in 2007 along with Goldman Sachs Infrastructure Partners for MXP44bn. Each CCD represents 100 B series shares and is due 2038, the year the concession expires. Investors buying the CCDs receive a share of the flows of revenue after the debt is serviced. The instruments may not yield these flows in the first few years, a banker on the deal explains, but once the debt is paid, investors will start to see bigger returns. Additionally, ICA and Goldman plan to add about MXP1.6bn and MXP400m, respectively, in new equity through the subscription of new A series shares, ICA says. “This is sending a message that they are not pulling out,” says a banker on the deal, emphasizing that the proceeds are going towards paying the debt, and not repaying shareholders. Following the deal, Goldman will own 54.5% of the trust, ICA 13.6% and the CCD holders 31.7%, ICA says. Santander and Goldman managed the transaction. The deal is the second of its type, which gives Mexico’s pension funds the ability to invest in equity, and the first under a new regulatory structure defined earlier this year. “This is probably the most important in the Mexican financing market that we’ve seen recently,” Mexico’s head of public credit Gerardo Rodriguez tells LatinFinance. Set to follow as soon as this week are CCD deals from Wamex and Mac
Category: Structured Finance
Spirits Brighten at Istanbul IMF
Issuers, bankers and EM investors gathered in Istanbul over the weekend for the IMF annual meetings note a dramatic improvement in sentiment since the March IDB conference in Medellin. However, market veterans worry that over exuberance willl create a new bubble. “We are now seeing signs of the beginning of global economic recovery, as well as improvement in the functioning of financial markets, but the situation remains fragile,” says Deutsche Bank chairman Josef Ackermann. “There are valid questions about the durability of this recovery,” says Citi senior vice chairman Bill Rhodes. “We need to be highly mindful of the risks to securing the restoration of healthy banking flows.” The pair was speaking at a forum organized by the IIF, which predicts a rebound in capital flows to LatAm next year to $166bn from $122bn this year and $147bn in 2008. Capitalizing on the mood, LatAm bankers are eagerly pitching new issues and liability management, while previously shuttered financing options like euros are back on the table. And in just 6 months, issuers have gone from crisis management and plain vanilla multilateral lines to higher quality problems. “It could again become a recurring source of funds for non-European sovereigns,” Mexico’s head of public credit Gerardo Rodriguez tells LatinFinance, speaking of euros. Last week’s Pemex euro deal reopened the door and other high grade LatAm names like CAF are also heard weighing the European investor base. Mexico – typically one of the most sophisticated sovereign issuers – is also courting foreign investors to participate in the peso bonos market. “I see a lot of potential there in terms of involvement in the local market,” says Rodriguez, speaking of the Asian buyside. Analysts say that most of the risk for the larger LatAm economies is external. However, Brazil’s euphoria over winning the Olympics bid compounds the fear that some participants may get carried away. “There’s risk there, but it remain
Jamaica Highway gets IDB Loan
The IDB has approved a $70m facility to Bouygues Travaux Publics and Autoroutes du Sud de France to expand and upgrade the Transjamaican Highway, which links Kingston to western suburbs and central regions of Jamaica. An IDB spokesman declines to provide the loan’s maturity.
Multilaterals Team Up for Microlending
The IDB’s MIF, OPIC, IIC, Swiss microfinance investment management company BlueOrchard Finance and other international investors have joined forces to establish the Microenterprise Growth Facility (Migrof), which will provide up to $250m in funds to microfinance institutions in LatAm and the Caribbean. Migrof intends to offer medium- and long-term financing both in local currency and in USD, and is aiming to distribute an average of 35% of the total pool in the form of local currencies. It is expected to begin its lending activity in early 2010.
Colinversiones Gets Multilateral Support
Colombian power plant holding company Colinversiones is getting $150m in financing from the IFC, CAF and DEG to build the Flores IV project, which will increase the plant’s power generation capacity by 38% to 610 MW. The total cost of the project is estimated to be $188m. The loan matures in 11 years. CAF’s participation in the deal totals $62.5m; the IFC’s is $62.5m, and DEG is lending $25.0m.
CAF Looks to Niche Markets
Andean development bank CAF is preparing to finish up its borrowing for the year with possible domestic currency taps in Peru, Uruguay and Venezuela. “We have a mandate to issue in the local markets,” CAF CFO Hugo Sarmiento tells LatinFinance. He adds that CAF met most of its needs with a $1bn 8.125% of 2019 dollar bond issue in late May. “Obviously these are not large markets, but there are arbitrage opportunities after swapping into dollars,” says Sarmiento, without giving specific expected sizes for each. Regarding quasi-sovereign issuance, Sarmiento explains it is not as easy to do this in Venezuela as it is in other markets, but he says the bank is having a “very good dialogue” with the government. Dealing with Peru and Uruguay is a more straightforward process, he adds. He expects to have issued in at least two of the three local markets by the end of the year. He says CAF expects 18% loan growth in 2009, up from previous expectations of 8%. CAF delegates were in Beijing attending LatinFinance’s Latin America China Investors Forum last week.
IDB Aims to Push China-LatAm Beyond Commods
The IDB is aiming to channel Chinese investment into vehicles that will support LatAm’s development beyond commodity exports. The Agricultural Bank of China is set to officially join a $1bn trade finance program. “We’ve begun signing up [Chinese] banks for our Trade Finance Faclitation Program,” says Steven Puig, a vice president at the IDB tells LatinFinance, noting that the Bank of China is already on board. It is actively seeking funds from others. This program and others including a $150m equity fund investing in SMEs – receiving Chinese funds via its participation as an Inter-American Investment Corporation member – are a way to direct investment into the bottom of the pyramid as well as the top. “We’re hoping this will spur trade in general and not just the commodity-related trade,” he says.
Cabei Makes Rare Dollar Bond Outing
Cabei has sold $500m in 2014 bonds, upsizing from the $300m first announced. The Central American development bank – more accustomed to funding in fringe currencies like Costa Rican Colones and Taiwanese dollars – priced at par with a 5.375% coupon to yield US Treasuries plus 300bp. Bankers managing the transaction declined to disclose the book size on Cabei’s first issue in USD since 2005. Barclays and Citi managed the sale, rated A2/A minus. Bank officials have indicated that Cabei plans to issue in Colombian pesos and Taiwanese dollars before year-end.
Argentina gets IDB Loan for Roads
The IDB has approved a $120m loan to Argentina to finance road improvements in various provinces. The loan is part of a new $2.5bn IDB credit line, the bank says. The line is effective for 20 years and its loans are denominated in USD, with interest rates linked to Libor. The first loan has a grace period of 4.5 years and an amortization period of 25 years.
Bladex Gets 2-Year Money in Asia
Panama-based multilateral lender Bladex has raised a $100m via a 2-year loan in Asia. The facility is co-led by China Development Dank and Mizuho and the margin is heard at less than 200bp. “This transaction is the first syndication placed in Asia by a Latin American financial institution, without mitigating the credit risk through the use of guarantees of any sort,” says Gregory Testerman, senior MD for treasury and capital markets for Bladex. “The loan enhances the diversification of Bladex’s financing sources, while further developing the bank’s presence in the Asian markets. Proceeds from this financing will be used to promote foreign trade, as well as the economic development of Latin America,” he adds. Bladex is in the process of raising a second in the loan market and seeking a better margin on the sequel.