Ingenio Magdalena, the Guatemalan sugar producer, has sealed a US$125mn pre-export finance (PXF) facility from a syndicate of banks.
The three-year facility was arranged by Banco Latinoamericano de Comercio Exterior (Bladex) of Panama, which also acted as bookrunner, administrative agent and collateral agent. This is the first such financing Bladex has arranged for the borrower.
GTR understands that eight other banks participated on the syndicate, namely the European banks ABN Amro, Deutsche Bank and KfW-Ipex, Banco Itau of Brazil, Davivienda of Colombia and the Panamanian banks Aliado, Global Bank and Prival.
The facility was launched at US$100mn, but was massively oversubscribed. While the company could have borrowed more than twice the original requirement, Magdalena settled eventually at US$120mn.
The facility is priced below Libor plus 4% which, according to Alejandro Jaramillo, head of loan structuring and distribution at Bladex, simultaneously satisfied the borrower and enticed banks onto the transaction.
For Panamanian banks in particular, the pricing of the PXF was attractive, since their cost of finance is generally higher than banks from, say, Colombia or Brazil.
But as with elsewhere in Central America, there is liquidity in the Panamanian banking market and banks are now looking to engage in more cross-border trade and to establish bilateral relationships with companies outside of Panama.
Jaramillo tells GTR that the presence of offtake export agreements from the biggest sugar traders of the world (Sucden for one) helped create a diverse syndicate.
The Guatemalan sugar sector is one of the most mature in Latin America and Magdalena recently overtook Pantaleon as the country’s biggest producer. Whereas the quantities being produced in Brazil are much larger, the quality and efficiency of the Guatemalan sugar market sets it apart from competing countries.
For one, each of the major sugar manufacturers owns and operates its own ports, meaning the sugar can be reliably and efficiently exported. This also acts as a boon for security. Guatemala is routinely labelled one of the world’s most dangerous countries. Investors are reassured by the safe passage of exports provided by the fully-managed export cycle offered by Magdalena and other sugar companies.
Unlike many of its competitors, Magdalena also refines its sugar for export. Compared to the raw commodity, refined sugar attracts a much-higher market price and so quality is important.
Eventual buyers of Magdalena’s produce include Coca Cola and Pepsi. The names of these purchasers and the quality of the produce make deals such as these easier to sell to the market, according to Jaramillo.
The transaction itself is large, for a medium-term Central American PXF. Term loans for capital expenditure, for instance, can be syndicated at more than US$200mn, but the traditional corporate PXF size is between US$75mn and US$100mn.
The fact that the demand was there to syndicate this transaction for more than US$200mn is evidence of the quality of the borrower.