Moody’s says it has upgraded America Movil’s ratings to A2 from A3. The outlook is stable. The upgrade was based on the expectation that the Mexican telecom company will continue to be successful operating in an increasingly competitive environment and that this will translate into steady and strong cash generation and credit protection metrics. The upgrade also considers the longer-term benefits of acquiring Telmex and Telmex International, despite slightly weaker credit metrics after the merger. The agency says the company’s liquidity position shows strong coverage of working capital, capex, near-term debt maturities as well as dividends and tax payments.
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Brazil Tightening Expected In April
In line with consensus, Brazil’s Copom kept benchmark Selic rate at record low 8.75%, signaling a rate increase in April. Bulltick Capital expects the central bank to tighten by 50bp in April, adding at least 150bp by the end of the year. Barclays also believes a 50bp hike will come in April and that the Selic rate will increase by 250bp by the end of the year.
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Mexico Rates to Stay Put
Goldman Sachs expects Banxico to keep its monetary policy rate unchanged at 4.5% today. Morgan Stanley agrees, saying that “despite February’s relatively high inflation reading, caused in great part by a spike in selected produce quotes, the central bank is likely to reiterate that there is no firm evidence so far of second-round effects on inflation from higher administered prices and taxes.” Annual inflation stood at 4.83% in February, according to Banxico. The target is 3.00%.
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UK’s AMT Brings Brazil HY Bond
London-based pig iron trader AMT is in the market with a $50m 3-year bond paying an 11% coupon. Books opened this week on the Brazil-focused issue, which is guaranteed by pig iron exporter Cosipar and shareholders of the Costa Monteiro Group. Most of the high yield buyers for the deal are located in Brazil, including family offices and private banking. The deal is in $100,000 denominations, with a maximum order of $5m per client. The offer has already drawn interest from Asia, Europe, the US and Chile, says a banker close to the trade. Proceeds are for working capital and there may be room for $10m-$15m in growth depending on demand. The issuer also gets working capital from multilaterals including the BNDES and IFC. Dinosaur Securities is leading the deal. According to the deal marketing, AMT expects revenue of $400m in 2010. AMT sales are 85% destined to North America, including long term contracts to clients including Gerdau, Nucor, Thyssenkrupp, North Bluestar and NMT. Cosipar exports 100% of its production through AMT and expects sales to reach $160m in 2010, the prospectus adds.
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Odebrecht Buys Kuntur Option
Brazilian infrastructure developer Odebrecht has signed a deal with Conduit Capital for an option to acquire a 51% stake in Peru’s Kuntur Transportadora de Gas, according to Conduit partner Marc Frishman. The asset is a gas pipeline that will require about $1.5bn to be developed. “Odebrecht is advancing a significant amount and will invest more than enough to conclude the concession agreement,” Frishman tells LatinFinance, without disclosing the exact amounts of the deal. He adds that the pipeline development will be financed with Conduit’s own equity and debt financing, which the New York-based private equity shop is in the process of obtaining. Frishman adds that construction will begin in Q1 2011, after the project gets an environmental impact assessment and a risk study required by the local government. The pipeline will take 5 years to build.
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Argentina Files $15bn Shelf
Argentina has registered an issuance program of up to $15bn with the US SEC. While no details on future issuance have been provided, the filing notes the document is good for the sale of debt securities, warrants and units. Proceeds are earmarked for general purposes of the sovereign including the refinancing, repurchase or retirement of its domestic and external indebtedness, according to the document. Cleary Gottlieb is the law firm representing the issuer, though no underwriters have been named in the document. The sovereign is preparing a return to the public markets in a process that is fraught with challenges ranging from domestic politics to international litigation from holdout investors.
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Fitch Removes Senda From Negative Review
Fitch has affirmed Grupo Senda’s B minus rating and removed it from watch negative, assigning a stable outlook. The agency cites the turnaround in the Mexico-based passenger transportation company’s operating and financial performance beginning in H209, as well as the improving business and economic environment in Mexico. It expects Senda to continue to benefit from improvements in the Mexican economy, which is expected to grow at least 4% this year, after a contraction of 6.5% in 2009. Ebitda for the first, second, third, and fourth quarters of 2009 reached MXP81m, MXP94m, MXP167m, and MXP187m, respectively. Ebitda improvement was driven by tariff increases of approximately 20% in H209 and resulted in margins of over 20%. However, Fitch says the cash position remains weak. As of December 31, Senda had MXP146m of consolidated cash and marketable securities and MXP375m in short-term debt. Additionally, Fitch says total net debt/Ebitdar increased to 5.5x as of December 31, from 4.7x at end-2008. Fitch expects the company to keep net-debt-to-Ebitdar around 4.0x-5.0x over the next 2 years.
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Hypermarcas Launches Equity Follow-On
In contrast with this week’s other Brazilian equity deals, consumer brands holding company Hypermarcas is heard drawing a bid for its follow-on, scheduled to price March 31. “Hypermarcas is going well,” says a Brazil-based equity investor looking at the deal. The company plans to issue 43.5m shares and will grant underwriters a 6.5m share greenshoe. It also reserves the right to issue an additional 8.7m shares if demand is strong enough, and early indications point to strong interest. All told, the 58.7m shares would raise the company BRL1.3bn, assuming Thursday’s BRL21.92 closing price. Proceeds are earmarked entirely for M&A, the company says in a filing. Citi, Credit Suisse, Bofa-ML and Itau BBA are leading. Investors apparently like the company’s series of well-executed acquisitions of the past month. The stock has performed well since a 2008 IPO and investors also appear to like the fact that management has delivered on promises. Eike Batista’s oil services and ship building unit OSX raised 62% less than targeted through its Wednesday IPO, a deal widely expected to be one of the biggest LatAm equity issues of 2010. And Renova, the Brazilian renewable energy specialist, failed to price its IPO Wednesday, the scheduled date for the deal.
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Gafisa Follow-On Hits Resistance
Gafisa, which opened books Thursday on an equity follow-on offering, is heard already facing pressure to offer a healthy discount on the shares. “Investors that want to participate are saying they need [a] 10% [discount] and the ones that are hesitating are asking for 15%,” says a US-based hedge fund manager with $500m in assets. The remark is clearly not representative of all potential buyers, but it suggests the company may be in for some haggling. Gafisa says it wants to sell 74m shares and will offer underwriters a 15% shoe of 11.1m units. At Thursday’s closing price of BRL13.06, that could add up to BRL1.1bn, while a 10% discount would result in something closer to BRL1.0bn. Itau BBA, JPMorgan and Votorantim are joint leads on the deal, scheduled to price March 23.
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Copa Holdings Sells Secondary Equity
Panama-based airline operator Copa Holdings has issued 1.84m shares to raise $103m. CIASA, a 29% shareholder in Copa Holdings, is divesting 1.6m units and granted sole underwriter Morgan Stanley the option to sell an additional 240,000, which the bank exercised. The shares priced at $56.00 late Thursday, a 1.8% discount to the $57.04 closing price. Copa Holdings controls Copa SA, based in Panama, AeroRepublica, based in Colombia and a leasing unit based in the Virgin Islands. Copa Holdings will not receive any proceeds from the offering.