LatinFinance - March/April 2013 - 8

Debt

High-yield leaps then stumbles
High-yield credits surfaced earlier than usual this year and
bond in late January, which was priced to yield 7.125%.
dominated issuance in the first weeks of 2013, taking advantage
of an uptick in risk appetite. But by February, sentiment had
started to turn amid a pick-up in US Treasury yields – and several Belize was poised to close an exchange of its 8.5% $544 million
transactions were shelved.
2029 bond on March 8. The sovereign defaulted on the note
In January, high-yield names in the Brazilian protein sector
last year, although it later made a partial interest payment
were well received. Brazilian meatpacker Marfrig was the first
while going through negotiating rounds with creditors. Belize
single-B credit to try its luck in the international bond market
is offering investors a 10 cent haircut, plus accrued interest, to
with a $600 million 2017 issue. It
switch into a new 2038 bond which
increased the size of the deal from an
begins amortizing after six years.
DCM rank by volume, year to February 15
expected $300 to $500 million, after
Investors are also being asked to
JPMorgan out to early lead
drawing $4 billion in demand. The
take a yield cut – the 2038 will pay 5%
Rank
Bookrunner
Value $m
# Deals
bond was priced to yield 9.875%, well
for the first four years, stepping up to
1
JPMorgan
3,242
11
inside the 11% to 12% levels it was
6.767% in 2017. The deal needs 75%
2
Citi
3,015
15
heard considering earlier.
take-up to go ahead. An investor group
Demand continued for B2/B+
3
HSBC
1,709
6
representing around $200 million of
rated Brazilian meatpacker Minerva
the paper has said it will participate.
4
BAML
1,583
10
and B1/BB- JBS. Both found solid
The bonds were trading in the low 60
5
Deutsche Bank
1,280
6
demand and competitive pricing –
cent area before the deal was launched
6
BTG Pactual
1,179
8
JBS’s $500 million deal even priced
in mid-February.
7
Barclays
1,108
2
through its curve.
In the new issue market, Mexico
8
BBVA
1,077
5
Yet by early February, the market
was the first LatAm borrower to sell
9
Goldman Sachs
971
4
had become less receptive to junk rated
a dollar bond in 2013, going in early
10
Credit Suisse
938
4
companies. Brazilian airline Gol sold a
to get ahead of any movement in US
$200 million 10 year non-call five bond
Total
20,417
44
Treasuries. The sovereign reopened its
to yield 11%. Brazilian oil services
4.75% 2044 bond, adding $1.5 billion
Source: Dealogic
provider Schahin Oil and Gas (BB+/
to bring the total size to $4.46 billion.
BB-) postponed a $700 million 2020
It priced the tap to yield 4.194%, equal
non-call four-year issue the same day,
to 110 basis points over Treasuries
Risk appetite wanes
despite having raised $900 million in
and less than 10 basis points back of
Markit CDX LatAm Corp Index (bp)
demand. Initial price thoughts were
400
it curve. Investors placed around $3
high-6% to 7%. A few days later, J&F
billion of orders for the bond, which
350
Participações (B/B+), the Brazilian
was sold at 109.615.
300
holding company for businesses
Lower down the sovereign credit
250
including meatpacker JBS, postponed
scale, Paraguay (Ba3/BB-/BB-) made
200
its own deal. It had been looking for a
its international bond debut.
150
yield in the 9.75% area for a 2020 nonIt sold a $500 million 2023 bond
100
call three-year bond.
at the tighter end of 4.625% to 4.75%
50
The pullback in risk appetite
yield guidance, after raising more than
0
weighed on investment grade Banco
$5 billion in demand. Paraguay’s deal
de Bogotá’s $500 million 2023 tier
was priced tighter than the 10-year
two bond (Baa3/BBB-) also – observers
bond Bolivia sold when it debuted
said the spread of 342 basis points
last year bringing similar political and
Source: Markit
over US Treasuries was fair to cheap.
macroeconomic risk.
Nevertheless, the bank generated $3.6
Guatemala capitalized on scarcity
billion in orders and showed the market remained open for high- value and expected movements in US Treasuries to add a new
grade issuers. The bond was priced at par to yield 5.375%.
point to its dollar curve with a $700 million 2028 bond. Buyers
Banco de Bogotá was one of 10 financial institutions to sell
put in close to $4 billion in orders.
dollar-denominated bonds in the first two months of the year.
The sovereign was satisfied with the 5% yield, the vice
Banco do Brasil saw greatest demand on its Basel-III compliant
minister of finance told LatinFinance. The Central American
$2 billion tier one perpetual non-call 11 year bond, as investors
nation chose a 15-year tenor to avoid a maturity too close to
placed $16.3 billion of orders in late January.
its 2022 bonds. The Ba2/BB/BB+ bond was priced in line with
Banco de Reservas de la República Dominicana
5%-area yield guidance, which followed low-5% initial price
(BanReservas) debuted with a $300 million 10 year tier two
thoughts. LF
5-Feb-2013
15-Feb-2
013

24-Jan-2013

11-Jan-2013

31-Dec-2012

6-Dec-2012

18-Dec-2012

26-Nov-2012

13-Nov-2012

29-Oct-2012

15-Oct-201

March/April 2013

2-Oct-201

20-Sep-201

8 LatinFinance

Haircuts in Belize

LatinFinance - March/April 2013

Table of Contents for the Digital Edition of LatinFinance - March/April 2013