Latin Finance - January/February 2012 - 28

they don’t necessarily speak to a bank’s abilities. BAML was on several complex specialized transactions in LatAm, including debt IPOs, local currency transactions, structured and liability management deals. Nor was the bank afraid of a challenge, taking on a debut issue for Chilean bus company Inversiones Alsacia, Chile’s ﬁrst high-yield issue since 2007. The borrower raised $464 million from a 2018 bond, whose scarcity value caught investors’ attention but nonetheless required a wider 8% yield to raise comfort levels on what was a highly leveraged concessionaire that was using the proceeds for an acquisition. According to Urmeneta, Alsacia was one of the few structured deals done in the public markets, and represented value for those who understood that the bus-concession’s contracts meant the government was on the hook for the bonds. The bank also made its presence felt in an asset class that is expected to grow in coming years, namely global local currency bonds. It was among the leaders in executing Brazilian real-denominated transactions in 2011, bringing to market three of the six o erings completed over this period. This included Arcos Dorados’s LatinFinance award-winning 400 million real ($255 million) bond, as well as o ers for telecom Oi and Banco Safra. It also managed a 1,250 trillion peso ($677 million) o er for Empresas Públicas de Medellín. Priding itself on its liability management capabilities, BAML led an array of exchanges amounting to more than $4 billion. This included a $117 million exchange for Peruvian bank BCP, and a 1.7 trillion peso local market swap for Colombian brewer Bavaria, which agreed to exchange existing debt for bonds guaranteed by owner SABMiller. Despite a slowing down in activity towards the end of the year, Urmeneta says many issuers are ready to pull the trigger in 2012. LF

Equity House
Itaú BBA

Tough Times
ankers may have thought that the market for LatAm equity issuance was tough in 2010, but it was even rougher in 2011 when international market disturbances exacerbated regional discord on pricing to cause trouble for everyone, particularly IPO issuers. Deals were put o indeﬁnitely, pulled on the night of pricing, or priced below their target ranges. Shares traded down after issues as international investors turned their backs on the local Brazilian growth stories that had previously fueled the IPO market. Continued uncertainty

Challenging conditions: Iunes for 2012 loomed in December, with the European debt situation still unresolved and risk aversion still high. No ECM shop in the region was immune to these events. However, some deals were labeled successful in a relative sense, and Itaú BBA’s investment banking unit had a hand in quite a few of them. “We expected another record year, and it ended up slightly di erent,” says Fernando Iunes, executive director for investment banking at Itaú BBA. “Market

UPDATE
For the full story and daily news on equity, see www.latinﬁnance.com

conditions were very challenging. We had windows of opportunity, but they were short and crowded.” Itaú BBA was at top of the league tables in terms of deal numbers and volume during the period under consideration, according to Dealogic data. The bank’s $3.68 billion in volume came in just behind Credit Suisse’s $3.70 billion, and its 28 deals led the region. Critics will point to its Brazil focus, though it also worked on large New York trades for non-Brazilians, and at the end of the day, Brazil is the country that generated the most new issuance volumes for equity. The shop was a joint bookrunner on Arcos Dorados’s $1.25 billion IPO, and on Gerdau’s 5.54 billion real ($3.5 billion) follow-on o er, the winners of the LatinFinance IPO of the year and follow-on of the year, respectively. The Gerdau transaction was not only large, but complicated – involving the steelmaker’s two share classes and a unit selling secondary shares to participate in the primary portion. BTG Pactual and Bradesco also worked on the deal. Arcos’s debut followed the next day, and was the region’s only deal in 2011 to price above its target range. The transaction, also managed by Bank of America Merrill Lynch, Morgan Stanley, JPMorgan and Citigroup, stood out as well for a strong aftermarket performance that paved the way for a $1 billion follow-on in October. Arezzo – a popular domestic shoemaker, little-known outside of Brazil – kicked o the 2011 IPOs. The issuer raised 566 million reais in the only deal besides Arcos Dorados to reach the top of its price range. The company known for its Arezzo and Scutz brands raised funds to open new stores, expand existing ones, make acquisitions, and fund working capital and operational improvements. Bank of America Merrill Lynch and Credit Suisse joined Itaú BBA on the sale. In the last deal of 2010, Itaú BBA also participated in a deal for Droga Raia, which became the ﬁrst Brazil IPO of the year to land at the top of its range. The drug store raised 655 million reais in a transaction that saw eight times demand and was designed to help fuel growth

28 LATINFINANCE

January/February 2012

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Latin Finance - January/February 2012

Table of Contents for the Digital Edition of Latin Finance - January/February 2012