Moody’s has assigned a Caa3 rating with negative outlook to Argentina natural gas distributor Metrogas’ MTN program of up to $600m. It says the company’s liquidity is extremely weak relative to its debt maturity profile as a provisional tariff increase announced in late 2008 has not taken place and as ARP devaluation exacerbates liquidity challenges by increasing interest and principal payments of USD-denominated debt. A day before, S&P had downgraded the issuer’s ratings to CC from CCC minus, saying Metrogas faces high refinancing risks in 2010 and 2011, when maturities will reach $21m and $42m, respectively. The outlook is negative. Metrogas says it has hired Barclays to evaluate debt refinancing alternatives.
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EM Bond Funds Crack $5bn Mark
Inflows into EM bond funds moved over the $5bn mark during this past week on the back of their biggest weekly inflow in over a decade, says EPFR Global. EM debts funds’ performance was also positive, according to Lipper. EM debt funds gained 1.18% in the week ended March 11, bringing year-to-date gains to 3.53%. Meanwhile, global income funds are up 0.19% in the week and 1.6% ytd, while international income funds are ahead 0.07% in the week and 0.57% ytd.
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UBS Brazil Banker Skips to BofA-Merrill
Luis Castro, a Sao Paulo-based coverage banker at UBS specializing in healthcare, his jumped ship to Bank of America Merrill Lynch in Sao Paulo. The executive director’s departure leaves UBS’s investment banking ranks in Brazil virtually depleted, according to executives at competing shops. The Swiss bank is understood to be looking to rebuild its Sao Paulo operation, which was hit hard by the sale of Pactual back to Andre Esteves. Castro moved to Brazil last fall as UBS was gearing up to rebuild its local presence following its sale of Pactual back to BTG. At BofA-Merrill, he will be a director, with similar coverage responsibilities, according to people close to the move.
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EM, LatAm Equity Funds Show Strength
Performance for LatAm and EM equity funds was positive in the week ended March 11. Lipper data shows that EM equity funds were up 2.90% in the week, taking them to a 1.16% return year-to-date. LatAm equity funds gained 0.15% in the week and are ahead 3.96% so far this year. Global small and mid-cap funds are up 2.63% for the week and 3.11% ytd. Overall, EM flows have continued to rally so far this year, with flows into EPFR Global-tracked equity funds reflecting increased optimism about prospects for commodity prices and exports. In fact, BRIC equity funds have posted inflows for the fourth consecutive week, the shop says, without providing further detail.
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Morgan Stanley Strategist Heads to Buyside
Vinicius Silva, an EM equity strategist at Morgan Stanley, has decamped for the buyside. He is now a principal at Altima Advisors, a UK-headquartered alternative investment manager with a focus on equities and a total of $2.5bn under management. Silva says he will be helping Altima build up its EM equities portfolio, sticking to macro equity strategy and also taking on coverage of natural resources companies. He will be based in New York. Altima has a global equity fund, an agriculture fund and an EM equity vehicle. A Morgan Stanley official says the EM strategy post vacated by Silva will likely be filled, though not necessarily in New York. Silva, who was a VP for global emerging markets equity strategy, reported to Jonathan Garner, head of GEM strategy, who remains at the firm. The official notes that Morgan Stanley has recently hired Guilherme Paiva from Deutsche Bank to lead LatAm equity strategy.
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JBS Plans Domestic Equity Follow-on
Brazil’s JBS has filed its intent to hold a primary and secondary share offering on the BMFBovespa. It does not indicate size or timing for a transaction that would add to a Brazilian pipeline expected to yield more than BRL50bn in new issuance this year. BTG Pactual has been hired lead manager, joined by JPMorgan, Santander, Bradesco and Banco do Brasil. The meatpacker plans to use proceeds to finance its expansion plans, working capital and general expenses. An IPO of its JBS USA unit in the US is also expected in the first half of this year, which is expected to raise $1bn-$2bn, according to a report from HSBC. JBS, which IPOed in 2007, has a free float of 41% and a market capitalization of BRL22.75m, according to HSBC. The shop is positive on JBS’ recent merger with Bertin and purchase of Pilgrim’s Pride, though how it handles the integration of each, bankruptcy problems at Pigrim’s and exposure to the US economy will drive valuation in the short to medium term. JBS shares closed down almost 4% Friday at BRL8.77.
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Mexican Broker Plans Local IPO
Shareholders of Mexican financial group Actinver have agreed to take the company public via the local stock exchange, the company announced in a regulatory filing. Its own brokerage, Actinver Casa de Bolsa, will manage the process. The company says it will register shares with the local securities registry no later than June 30.
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Cemig Sells Non-Convertible Bonds
Brazil electricity generation company Cemig has sold BRL2.7bn in non-convertible debentures, the company says. A 2012 tranche of BRL1.57bn pays DI plus 0.90% and a 2015 tranche of BRL1.13bn pays IPCA plus 7.67%. Proceeds will be used to pay down debt. BB Investimentos lead the sale, rated Aa1 by Moody’s.
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EPM UNE Upsizes Local Bond
Colombian telecom UNE, a unit of Empresas Publicas de Medellin, sold COP300bn in local bonds, more than the COP200bn originally planned, according to information from Correval, which managed the sale with Bancolombia. Total demand rose to COP545bn, it adds. The AAA rated issue is divided into a 5-year tranche paying IPC plus 3.99% and a 10-year piece paying IPC plus 5.10%.
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AES Units Aim for Brazil DCM
Two units of Brazilian generator Companhia Brasiliana de Energia (CBE) plan to raise funds via the sale of BRL1.7bn in domestic bonds. Eletropaulo Metropolitana aims to sell BRL400m in 2014 bonds at the DI benchmark plus up to1.25%, with the rate to be determined during bookbuilding. It also plans to sell BRL400m in 2020s at DI plus 1.5%. Meanwhile, AES Tiete is preparing to sell BRL900m in 5-year bonds at DI plus up to 1.20%. “These debentures should ensure a 2-year extension of the current amortization period [at Tiete], which is indeed very positive,” says Itau in a research note. The issuers do not indicate lead managers. Proceeds will go to pay debt and finance investment plans. CBE is owned by BNDES and US energy company AES.