Scotiabank’s Chile unit has issued UF4m ($160m) in 2018 local bonds, says Daniel Orellana, CEO of Scotia Sud Americano Corredores de Bolsa, which managed the sale. He adds that total demand surpassed UF6m. The bonds priced at 100.93 with a 3.20% coupon to yield 2.97%, a spread of 100bp over the 5-year central bank BCU5 bonds. Proceeds will go to strengthen working capital.
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Bimbo Mulls Liability Management
Mexican bankers are heard pitching cash-rich Bimbo a liability management transaction, which could happen this year. “I feel there will be opportunities in the markets,” Bimbo CFO Guillermo Quiroz tells LatinFinance. “Maybe we’ll do something to increase the duration,” he adds. Bimbo’s debt has an average life of 3.2 years and is 50-50 MXP/USD, more or less in line with earnings. The company has $300m due in 2010 and no major amortizations the following year. There is a $1bn total looming in 2012. Following the late 2008 acquisition of Weston Foods assets in the US, which pushed leverage above 4.0x debt:Ebitda, Bimbo aims to get leverage down to 2.0x this year. It was roughly 2.5x in February.
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Mall Operator Joins IPO Queue
Sonae Sierra, the Brazil-based mall operator, has filed a prospectus to go public. The company claims to be the country’s third largest mall operator with properties in Sao Paulo, Brasilia and Manaus, among others. It is also building new shopping centers in three new medium-sized Brazilian cities. Total adjusted 2009 Ebitda clocked in at BRL104.4m, up from BRL80.5m in 2008, according to a preliminary offering document filed with the CVM. Credit Suisse and Itau BBA were hired to lead.
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Hypermarcas Fuels M&A Run with Equity
Brazilian consumer brands specialist Hypermarcas plans to return to equity markets to raise BRL1.25bn more for M&A. It is back less than a year after last July’s BRL800m follow-on. Hypermarcas has skipped some steps usually taken by follow-on issuers by announcing the deal with a prospectus that already includes a price date of March 31. The company plans to issue 43.5m common shares plus a potential 15% greenshoe of 6.5m units and a 20% hot issue of 8.7m. The deal, if priced at the BRL21.32 per share closing price of March 1, it could raise BRL1.25bn, says Hypermarcas. Citi is leading the offer, with Credit Suisse as stabilizing agent, as well as BofA-Merrill and Itau BBA. The company appears to be looking to benefit from strong credibility it has built up with investors. All of the cash from the new offering is earmarked for new M&A, it says. The company has made a handful of acquisitions since its last tap, and shares are up more than 200% in the last 12 months.
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BR Properties IPO Misses Target
BR Properties has become Brazil’s third debut equity issuer to date to miss its target price. The commercial real estate developer raised BRL1.07bn, pricing 82.7m shares at BRL13.00, short of the BRL16.00 midpoint of its targeted BRL14.00-BRL18.00 range by 19%. “The strongest demand was at BRL13,” says a banker on the deal, noting the market continues to be challenging. Still, the company has raised substantial funds through the sale of 62.9m primary and 19.8m secondary shares – each including a 5.4m greenshoe – and begins trading at a multiple that may be attractive to secondary market investors. “We look at all of the deals but we rarely participate in the IPOs,” says Roseli Machado, head PM in charge of equities at Banco Fator in Sao Paulo, noting that in most cases, IPO valuations have come too rich for many investors. Bankers on the deal appeared optimistic going into the week of pricing and said they expected to break the trend of Brazilian IPOs coming in below their desired valuations. But that did not pan out with BR Properties, which joins Multiplus and Aliansce as this year’s issuers missing target. The developer, whose main investors include private equity company GP Investments, plans to use proceeds for new real estate purchases and improvements to existing assets. The deal was led by Itau BBA, the global coordinator, and joint-leads Bradesco BBI, Goldman Sachs, Safra and Santander.
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Brazil M&A Boutique Signs Japan JV, Eyes China
G5 Advisors, the Sao Paulo-based M&A and asset management boutique, has clinched a partnership with Mizuho Securities to cooperate on M&A transactions involving Brazilian and Japanese clients. “The downside of the strategy of most boutiques is that they tend to be geographically focused,” Corrado Varoli, a founding partner at G5, tells LatinFinance. “At some point you may become less relevant over time if you don’t have a global understanding of what’s going on. We want to have [global presence],” he adds. “If you look at our pitchbook, we can claim to have a presence in all the major markets,” notes the former Goldman banker. He points to existing partnerships with US-based M&A boutique Evercore and a more recent venture with Mexico’s Protego. The next announcement for G5 will be a similar agreement a China-focused shop, Varoli adds. With Mizuho, G5 claims to already have several mandates from Japanese companies active in Brazil. Varoli argues that large global investment banks fail to offer consistent service across regions in all products and sectors. Boutiques with focused, locally-based bankers have an opportunity to fill the gaps in coverage, says the banker.
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Mexico Reopens Sovereign DCM
Mexico has seized advantage of improving risk appetite to retap its 5.125% of 2020 for $1bn at a yield it claims as the lowest ever for a 10-year. Demand was about $2.5bn, slightly stronger than the $2.0bn it drew in the original January $1bn offer. The Baa1/BBB issue reopened at 100.956 to yield 5.000%, or US Treasuries plus 139bp, in line with 140bp-area guidance. Investors and bankers on and away from the deal spot the reopening premium at around 12bp, based on the bonds trading at UST plus 125bp-130bp at close Wednesday. “A window started to open in the past few days, which gave us a financing opportunity at the lowest absolute yield that we’ve been able to achieve with a new 10 year transaction,” Gerardo Rodriguez, Mexico’s head of public credit, tells LatinFinance. “This was a compelling opportunity for us to advance our funding strategy, strengthen the benchmark status of the bond, and with that be in a much more comfortable position having done two–thirds of the amount we will need for the year,” he adds. Rodriguez says Mexico was also motivated by general positive feedback from investors. The deal was said by buysiders to have been driven by reverse inquiry, with the sovereign electing to announce at $1bn “will not grow,” rather than a smaller chunk open for growth, as might be expected on a retap. “There is a better feeling in the market overall, and about Mexico,” says Edwin Gutierrez, who helps manage $5bn in EM debt at Aberdeen Asset Management. He says different sectors in the Mexican economy point to a strong cyclical rebound, and that risk aversion stemming from the Greek debt crisis is becoming more of a non-story for LatAm debt issuers. JPMorgan and Morgan Stanley managed the transaction. The bond was originally sold January 11 at 99.037 to yield 5.250%, or UST plus 142.4bp. On that deal, the new issue premium was seen as less than 8bp. BofA-Merrill Lynch and Citi managed the January deal. Bankers away from the trade are optimistic that if it trade
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Dim Hopes for Mexican ABS Return
While Mexico’s local debt markets show signs of life, bankers and investors foresee a slow return of structured debt transactions to pre-crisis levels. “I’m completely sure that we will see new ABS deals in the near future and also some RMBS that aren’t from government-backed issuers,” says Ricardo Cano, head of DCM at BBVA Bancomer. However events in the last 2 years have taught investors important lessons. “We’re going to see a divergence between ABS issuers this year – some will be able to come back to the market faster than others,” says Cano. Sergio Mendez, CIO at Afore XXI, agrees, saying investors will have to work harder to differentiate between issuers in terms of quality. As government lenders Fovissste and Infonavit prepare to place between MXP10bn-MXP20bn in RMBS each this year, prospects for private issuers are more limited. Banks are the most likely issuers, with BBVA Bancomer among prime candidates, according to investors and DCM bankers away from BBVA. They note that deals will be smaller than pre-crisis, when transaction volume could reach MXP4bn-MXP5bn. Infonavit is preparing to issue MXP5.69bn in RMBS March 10, and Fovissste MXP4.5bn March 24. Cano and Mendez spoke on a panel at LatinFinance’s 5th Cumbre Financiera Mexicana in Mexico City last week.
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Correction: America Movil Breaks Mexico Ice
A March 3 Daily Brief entitled “America Movil Breaks Mexico Ice” incorrectly states the price at the long end. The company priced a MXP3.28bn 15-year UDI-denominated piece at 51.5375% to deliver 100.0000% over 15 years at an annual interest of 4.4100% compound. The price is 100% discounted at a 6.20% annual rate. The bonds are zero coupon.
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Even Construtora Issues Debentures
Brazil’s Even Construtora has sold BRL75m ($42m) in 2013 non-convertible debentures paying 1.9% over DI in a private placement, says a banker involved. Of the total, Banco do Brasil acquired BRL50m and HSBC the remaining BRL25m. Proceeds will be used to refinance debt and cover capex.