Latin Finance - September/October 2011 - 8

Debt

Watching Windows

re-tapped its existing 9% 2018s following a $650 million eightyear NC4 in June. The company approached the market with Summer doldrums and a steep spike in volatility have pushed a smaller size of $300 million to meet threshold payments and volumes lower in recent months. The door essentially slammed avoid a spike in rates by year’s end on its ﬁnancial agreement shut for junk credits in August, and left high-grade borrowers with banks. The cement company raised $650 million, to dominate new issuance as they took advantage of razor-thin essentially covering its dollar needs for the next year. Citi rates after a ﬂight to safety bid sent yields on US Treasuries managed the transaction. lower. Another high-yield Mexican credit, Grupo Elektra, followed In early July, Colombia emerged for the ﬁrst time in 10 suit and put to bed its ﬁrst international bond in over 10 years, years as a full-ﬂedged investment grade credit, allowing it to becoming one of the few high-yield issuers to price over the past raise $2 billion in 10-year bonds with few months. The Mexican retailer DCM Rank by Volume, Year to August 19 its lowest ever coupon. Demand hit printed a $400 million seven-year HSBC inches up $7 billion before the sovereign priced NC4 at 98.656 with a 7.25% coupon the issue with a 4.375% coupon to to yield 7.50%. The BB-rated bonds Rank Bookrunner Value $m # Deals yield 4.425%. With nine Bs behind it, were brought to market by BCP, 1 Citi 9,351 42 Colombia was able to capture a wider Je eries and UBS. It last issued a 2 HSBC 8,502 57 group of investors through leads Bank foreign bond in 2000 when it priced a 3 JPMorgan 7,864 33 of America Merrill Lynch, Barclays and $275 million eight-year NC4 at par to 4 Deutsche Bank 7,626 28 Citigroup. yield 12%. At the time, the company 5 Santander 7,575 42 Early August saw the worst sello was rated B2/B. 6 BofA Merrill Lynch 7,245 37 since 2008 in the wake of S&P’s Hopes of a revival in the global 7 Banco Itaú 5,512 34 downgrade of the US to AA+ from real-denominated market grew this 8 Banco Bradesco 3,865 31 AAA, but Mexico once again showed summer when LatAm McDonalds its willingness to move ahead of the franchisee Arcos Dorados generated a 9 Credit Suisse 3,645 13 LatAm pack, tracking the nimbler US 3.6 billion real book for a 400 million 10 Banco do Brasil 3,348 24 high-grade market. real ($265 million) ﬁve-year global, Subtotal 64,532 183 The sovereign shrugged o market rated Ba2/BBB minus. The bonds Total 91,906 223 volatility to issue a $1 billion repriced at par to yield 10.25% with Source: Dealogic opening of its 5.75% 100-year bond use of proceeds going towards capex. as it looked to lock in historically low BAML, Itaú and JPMorgan were the yields on the back of a ﬂight-to-safety leads. DCM Rank by Fees, Year to August 19 rally in US Treasuries. Demand hit $2 Banco Safra soon followed suit Citi moves to top spot billion before the deal was priced at with a larger-than-expected 800 Rank Bookrunner Revenue $m % Share 96.50 to yield 5.959%, or 241.8 basis million real ($512 million) global after points over US Treasuries. The Baa1/ building a 1.6 billion real book. The 1 Citi 42 12.4 BBB bonds were brought to market by bonds priced at par to yield 10.25%. 2 JPMorgan 37 11.1 Credit Suisse and Goldman Sachs. The 144A/RegS deal was brought 3 Credit Suisse 36 10.7 Before long, Mexico was also to market by JPMorgan and UBS. 4 HSBC 28 8.3 setting its sights on the Samurai The bonds were rated Baa2 and BBB 5 BofA Merrill Lynch 28 8.3 market, but this time aiming to issue minus. Subtotal 249 74 a $500 million equivalent ﬁve-year Arcos Dorados and Safra’s ability Total 336 100 without the standard JBIC guarantee. to generate healthy demand for such Source: Dealogic In late August, Bank of Tokyo instruments has left bankers pitching Mitsubishi, Citigroup and Nomura the idea to other corporates in Brazil. were taking the sovereign to talk to Japanese investors about Several names have been heard contemplating this type of issue such an issue, but no deal had emerged. including Banco do Brasil and utility Taesa. Indeed, by late Mexico’s state-owned oil company Pemex also priced its August, Telemar’s Brasil Telecom was engaging investors amid lowest ever yield when it re-opened its outstanding 5.5% 2021 expectations that it would emerge with a global real bond. bonds for another $1 billion, coming with sub 5% pricing and September could be a busy month, with bankers expecting putting its external ﬁnancing needs behind it this year. HSBC, some $5-$7 billion in new supply. This includes some Peruvian Morgan Stanley and Santander led the BBB/Baa1 deal which names such as development bank Coﬁde, which has mandated priced at 105.011 to yield 4.835%, attracting Mexican, LatAm, Deutsche Bank and JPMorgan to issue up to $500 million in US and European accounts. 10-year bonds. Peru’s Corporación Lindley, a non-alcoholic Meanwhile, Mexican cement company Cemex was beverages company, is also heard preparing an international fortunate, making another visit to the international bond bond with Citi and JPMorgan. Both deals would mark the market in June just before windows closed for junk names. It borrowers’ ﬁrst foray in the international markets. LF

8 LATINFINANCE

September/October 2011

Latin Finance - September/October 2011

Table of Contents for the Digital Edition of Latin Finance - September/October 2011