Category: Structured Finance

The IDB has approved a $600m loan for Mexico under the Oportunidades program, which offers conditional cash transfers. The loan aims to help fight poverty. Mexico’s department of social development will carry out the program. The loan was granted for a 25-year term, at a spread to Libor.

The IDB has approved a $100m loan for Paraguay. The loan, says the IDB, will allow Paraguay to boost its institutional capacity in the public sector through the modernization of different public expenditure management processes and systems. The loan is for 20 years, with a five-year grace period, and carries a Libor-based rate.

The IDB has increased the amount of concessionary funds available for Bolivia, Guyana, Honduras and Nicaragua to $485m per year in 2009 and 2010 from $349m annually in 2007 and 2008. Bolivia will be able to increase its borrowing from the IDB to $157.4m from $113.2m yearly. Honduras will be able to borrow $165.7m yearly during this period, up from a previously approved limit of $119.2m. For Nicaragua, the limit will rise to $133.5m from $96.0m, and Guyana will be able to borrow up to $28.6m, from $20.6m.The loans should allow the countries to overcome the effects of the global economic crisis, says the bank. Resources for the loans will come from the IDB’s ordinary capital and its fund for special operations.

The highest rated LatAm issuer, CAF, delighted investors Thursday with a generously priced and well bid $1bn 10-year, its biggest bond issue to date. The A+ rated development bank priced at 99.825 with an 8.125% coupon to yield 8.151%, or 450bp over US treasuries. CAF started the morning whispering mid-400s on a benchmark sized deal and launched at 450bp. Investors had expected a deal after CAF’s filed this month a $1.5bn shelf, but they were surprised by such a large size – double any of the Andean multilateral’s previous issuance – and found yield above 8% attractive for an A+ credit. The new issue was trading up 1-2 points in the gray Thursday afternoon, say bankers away from the deal, implying cheap pricing. “They played it safe and left about 10bp-20bp on the table in order to get a good execution,” says a US-based EM dedicated investor. Bankers away from the transaction put the concession somewhere between 30bp-50bp, calling that reasonable considering size and the choppy trading in outstanding bonds. The book reached more than $3.5bn from 160 accounts, according to bankers on the deal, who say it was the issuer’s broadest ever distribution. Some 65% was EM and the rest high grade. Proceeds from the sale will go to general corporate purposes, including funding lending operations. Bank of America-Merrill Lynch and Credit Suisse managed the transaction. CAF last hit the dollar markets in January 2008 with a $250m 5.75% 2017 via Credit Suisse, Merrill and HSBC. Its largest issue before Thursday was a $500m 5.2% of 2013 bond, sold in 2003 through Merrill, CS, Deutsche Bank and Goldman Sachs. This year, it has sold COP240bn ($95m) in 2014 and 2019 bonds in Colombia in April, and JPY10bn ($108m) in 2019 bonds with a single Japanese investor in February.

The IDB has approved a $48.75m loan to Trinidad & Tobago so it can improve its education system’s quality. The total cost of the first phase of the program is $62.50m. T&T, says the IDB, will contribute $13.75m to its execution. The program will finance the construction, upgrading and equipping of 50 early childhood care and education centers and the development and implementation of an extensive training program for their staff. The IDB loan is for 20 years, with a 4-year grace period and an interest rate based on Libor.

The city of Ceara, in northeastern Brazil, is getting a $77m loan from the IDB so it can improve its health services. The loan will support the construction of a regional hospital in the region of Sobral; 9 polyclinics and 11 dental clinics. The loan will also finance the acquisition of medical and dental equipments for the new facilities and measures to improve health care management and the quality of services. The loan is for 25 years, with a 5-year grace period, and carries a Libor-based variable interest rate, the bank says. The state of Ceara will provide $46.5m in counterpart funds.

America Movil has wrapped up $1.5bn in ECA financing through Citi to build out its 3G and GSM networks throughout LatAm. Citi says the package includes a €500m loan insured by Finnish ECA Finnvera and 2 facilities insured by Exportkreditnamnden (EKN), the Swedish export credit agency, consisting of a €300m floating rate loan and a $471.5m fixed rate loan through AB Svensk Exportkredit. All 3 loans are long term credits, with final maturity in 2016 or later. In addition, DekaBank Girozentrale also participated in the financing, says Citi. The Finnvera loan signed in early November, the EKN floater mid-December, and the EKN deal in March. “This financing enables us to continue with the rollout of our investment plans to strengthen our 3G and GSM networks in Latin America,” says America Movil CFO Carlos Garcia Moreno. “This is essential to advance our growth plans in the region and consolidate our position as the leading wireless services provider in Latin America and the fourth largest in the world in terms of equity subscribers.” Milbank, Tweed was the lawyer on the financing.