Latin Finance - July/August 2010 - 6

Debt

Local Market Steps Up

European sovereign troubles have shut the door on LatAm companies hoping to issue bonds overseas, though local markets o er some relief. A permanent solution to debt problems in the euro zone are far o , and since Latin issuers generally have no urgent need for cash, they are waiting for volatility to subside. Braskem Idesa lit up a dormant loan market with plans to raise up “We’re happy with [EM] fundamentals, we’re worried about to $2 billion in debt for the Etileno XXI joint venture in Mexico. technicals,” says Esther Chan, who Sumitomo Mitsui Banking Corporation helps manage $5 billion in EM bonds (SMBC) is ﬁnancial advisor on the $2.5 DCM Rank by Volume, Year to June 11 at Aberdeen Asset Management. billion project, comprising construction Santander moves up the charts However, continued volatility and of a greenﬁeld petrochemical complex threat of more downside limit the in the Coatzacoalcos region of Rank Bookrunner Value $m # deals risk investors can swallow. Chan says Veracruz, which should be operating by 1 JPMorgan 4,978.46 17 continued inﬂows over the next few 2015. “We expect to be starting to put 2 Citi 4,654.86 14 months would revive investor appetite together a bank group later this year,” 3 Goldman Sachs 3,397.59 8 for EM. says a person close to the transaction. 4 Santander 3,397.57 12 High-quality issuers in Latin The ﬁnancing through SMBC is 5 Credit Suisse 3,393.40 14 America’s local markets have still been for a 20-year concession to build and 6 BofA Merrill 2,901.93 14 able to raise funds. Pemex continued operate four processing plants in 7 HSBC 2,669.57 15 in a quest to single-handedly account Mexico using natural gas produced for 2010 Mexican DCM volume, with a by Pemex. The deal will probably 8 Deutsche Bank 1,945.05 8 15 billion peso deal priced tighter than have a 3-4 year construction period, 9 Banco do Brasil 1,835.91 9 initial expectations. In May, it sold starting in around 18 months, and 10 Morgan Stanley 1,532.13 5 8.5 billion pesos in 2014 ﬂoating-rate roughly 12 years of post-completion Subtotal 30,706.47 63 bonds at TIIE plus 44 basis points, and amortizations. The IFC, Bancomext, Total 39,706.75 71 5.0 billion pesos through a reopening Naﬁn, Banobras, BNDES and US Exim Source: Dealogic of 9.1% of 2020 ﬁxed-rate bonds to are understood to be among target yield Mbonos plus 113 basis points. A lenders. well-bid 1.5 billion peso reopening of Loans Rank by Volume, Year to June 11 4.2% of 2020 inﬂation-indexed notes CDB and BESI storm the top yielded Udibonos plus 80 basis points. Bondholders shunned Argentina’s debt Rank Bookrunner Value $m # deals BBVA Bancomer, Banamex and HSBC exchange o er, as had been widely 1 Citi 884.55 4 managed the sale. predicted. Only $9.1 billion in bonds 2 BESI 782.14 2 Pemex is considered a candidate had been tendered by early June, less to reopen dollar markets for regional than 50% of the $18.6 billion the 3 CDB 750.00 1 borrowers once volatility settles. It sovereign admits to owing. 4 Crédit Agricole 620.00 5 met investors in June on a “non-deal” While Europe-fed risk aversion 5 BBVA 586.14 3 roadshow with Deutsche Bank and could be blamed for Argentina’s likely 6 Mitsubishi UFJ 320.00 1 HSBC. failure to meet a 75%-80% target 7 Mizuho 260.25 4 Liverpool followed at the end in its debt swap, the government 8 SG 187.14 3 of the month with a 3.0 billion peso made several mistakes in execution, 9 Santander 166.67 2 placement. The retailer priced 2.25 according to former central bank 10 ING 152.00 2 billion pesos in 2020 bonds at 8.53%, governor Martín Redrado. “The Subtotal 4,708.90 20 or Mbonos plus 128 basis points, economy ministry team didn’t do a and 750 million pesos of inﬂationprofessional job engaging with the Total 11,141.70 40 linked 2020s at 4.22%, or Udibonos ﬁnancial community in order to make Source: Dealogic plus 92 basis points. As of midthis palatable – it was just take it or June, substantial deals were expected from miner Peñoles and leave it,” says Redrado, who predicted 60% participation. Telefonica’s Mexican unit. It will be di cult for Argentine corporates and sub-sovereigns “When you have this type of [global] crisis, there is some to follow by raising funds internationally, but would depend on interconnection in the markets,” says Arturo Hanono, investment the sector, with export-oriented companies most likely to be able director at the InverCap pension fund manager, which manages to access once the volatility picture improves. Some are ready to about 42 billion pesos. “But there comes a moment when they try, such as Chubut Province, pitching a $150 million hydrocarbon can disconnect and are supported by strong fundamentals.” royalty ABS in mid-June. LF

América Móvil again took its fundraising outside, tapping Chile’s relatively calm market for its second, and the market’s third-ever “huaso” bond. The $193 million-equivalent 2035 inﬂation linked issue yielded 4%. It represents the ﬁrst deal by a foreign issuer in Chile at a maturity of more than ﬁve years.

Braskem in Mexico

Argie Swap Underwhelms

6 LATINFINANCE

July/August 2010

Latin Finance - July/August 2010

Table of Contents for the Digital Edition of Latin Finance - July/August 2010