Following a failed effort to tempt investors in 1997, the Colombian Coffee Growers Federation is attempting to tap the U.S. private placement market once again, this time with a hefty $200 million securitization of export receivables. Agented by Chase Securities, the notes have a seven-year final maturity and a four-year average life. Price talk last week was between 325 and 375 basis points over Treasuries.
Despite the fact that securitizations often allow issuers to pierce the sovereign ceiling, some investors were surprised by the fact that Duff & Phelps gave the transaction a preliminary single-A minus credit rating.
"There shouldn't be that much of a gap between the sovereign and their credit, particularly since these growers in the Federation are the weaker players in Colombia's coffee industry," said one investor.
Other investors said that they would not invest in a Colombian company, regardless of relatively high credit ratings and tempting premiums. "As soon as I heard the name Colombia I knew I wasn't interested," said one. "The country risk is too high."
The deal, which is currently being roadshowed, was made more difficult by the possibility that Columbia will lose its prized investment grade credit rating. S&P placed the country on "negative" outlook on June 11, citing concerns over the long-running civil war and the prolonged recession, which has widened the fiscal deficit and burdened the financial system. TH