Market Insights

Following a year of high-volume and record-breaking capital markets activity, Scotiabank and its clients earned accolades from LatinFinance magazine for major transactions that highlight the Bank’s prowess in delivering solutions in the Americas. This includes landmark private equity, sustainability-linked, green, and social bonds and loans, and sovereign foreign and local currency debt.

Each year, LatinFinance recognizes the region’s outstanding deals, people and institutions, and for 2021, Scotiabank Global Banking and Markets is honoured to be named in multiple award categories. These awards are especially meaningful with the increased intricacies of deal-making amidst a pandemic and alongside an impressive array of submissions considered by the LatinFinance editorial panel.

Ground-breaking in Latam leveraged finance

Scotiabank garnered recognition when KKR & Co Inc. earned ‘Private Equity Deal of the Year,’ for a sequence of leveraged, local currency transactions totalling approximately US$1.5 billion in Chile and Colombia. With Scotiabank serving as Financial Advisor, Joint Global Arranger and Joint Bookrunner, KKR successfully bid for a share of key fibre optic assets owned by Telefónica S.A. in Latin America. The transactions included the formation of new legal entities to create ‘first-of-their-kind’ open access networks, which will greatly expand digital access to millions of Chilean and Colombian homes.

With its un-matched credentials and having dominated previous leveraged finance transactions in Chile’s media and telecom, power, and cable sectors, Scotiabank provided recommendations and solutions, and successfully syndicated the transactions among partner financial institutions in a market with less experience with similar structures or technology infrastructure.  

“We helped our clients to finance transactions with bespoke structuring that combined the power of product expertise and local market knowledge,” recalls Randy Bingham, Scotiabank’s Managing Director, Media and Telecom Group, Corporate and Investment Banking. Randy credits the oversubscribed transaction to the collaboration between Scotiabank’s Latam Loan Syndication Group, corporate bankers in Chile and Colombia and KKR’s Structured Capital Markets group. 

Stephen Guthrie, Senior Vice President, International Corporate & Commercial Banking at Scotiabank points out that these transactions have since attracted considerable market interest as a model for future financing programs that could help other Latin American nations develop open-access digital networks. “The recognition we received from LatinFinance serves to highlight our approach - we strive to think differently for our customers and create customized solutions that support them as they chart new territory. We are proud to support our clients, assisting them in progressing in their strategic objectives, as long-term partners.”

Spotlight on ESG commitments by Suzano, ISA Interchile and Scotiabank

Scotiabank also stood out in the high-profile ‘ESG Deal of the Year’ category, by leading ISA Interchile’s US$1.2 billion issuance of senior secured green notes, which sought to refinance and finance construction of electricity transmission lines that will supply low-carbon and renewable energy to the country’s national power grid.

ISA Interchile granted Scotiabank the roles of Sole Global Coordinator, Joint Bookrunner, Green Structuring Agent, Ratings Advisor and Billing and Delivery Bank. These mandates were in light of the Bank’s extensive sustainable finance capabilities, its knowledge of the Americas’ power and utilities sector, and its experience helping issuers access international debt capital markets.

“ISA Interchile’s ambitions were impressive – since they would help Chile achieve its national commitment to carbon neutrality by 2050 – but, as a first-time issuer in international debt markets, they required extensive advice to develop their Green Financing Framework and ensure it was aligned with the Green Bond principles in order to get a positive second-party opinion, and attract astute foreign investors,” recalls Carlos Garcia, Scotiabank’s Director, Latin American and Caribbean Debt Capital Markets. 

The team’s legwork in structuring the transaction and executing a green marketing campaign, resulted in strong endorsement of the bond’s green merits from ratings agencies, enabling ISA to attract significant demand from both ESG funds and traditional investors. 

As a result, the inaugural issuance attained significant price tightening, with a 4.500% yield, to become the largest green project bond in the region to date, at the lowest coupon rate for a transmission company project bond.

Suzano Austria GmbH also stood out in the ESG category, and rightly earned the title of ‘Sustainable Borrower of the Year,’ owing to its dedication to aligning its ESG goals with its capital structure. Scotiabank played a key part in helping the world’s leading producer of market pulp and paper along the way, acting as Global Coordinator and Joint Bookrunner for a combined US$1.5 billion of Sustainability-Linked Bonds “SLBs” via 2032s (June/2021) and 2028s (Sept/2021). After originally breaking ground on the non-European SLB market back in September 2020 (and again in November 2020) with a focus on reducing GHG emissions intensity, the 2021 trades featured an evolved and ambitious framework. This encompassed industrial water withdrawal intensity and gender diversity, attracting sizable demand from top-quality ESG accounts worldwide. Structuring of a US$1.57 billion sustainability-linked loan further cemented the ESG commitment and capability from both Suzano and Scotiabank.

“It’s clear that companies are increasingly focusing on their ESG strategies, transparency and disclosure, and setting ambitious targets for the mid- and long-term,” says Daniel Gracian, Scotiabank’s Director, Sustainable Finance for Latam, noting that sustainable finance in Latin America recorded US$56 billion in transactions in 2021, up from US$22 billion in 2020. “Scotiabank is focused on helping our Latam clients stand out in this area, by supporting them in their ESG journey, achieving their decarbonization goals, and helping them incorporate sustainable finance solutions into their capital structure.”

Local and global lending, debt capital and marketing muscle

Scotiabank earned further notice for its syndicated lending and ESG abilities in the category ‘Syndicated Loan of the Year,’ as part of Grupo Coppel’s US$2.25 billion (MXN denominated) transaction in May 2021. When the Mexican department store chain sought to consolidate and refinance its debt, it turned to Scotiabank, which has provided the retailer with multi-product support through its Americas platform for more than 20 years.

As a Joint Lead Arranger and Joint Bookrunner, Scotiabank helped Coppel restructure its debts and leverage its strong ESG investments, which include commitments to raise management gender equity and produce green energy with solar panels on store rooftops. The new loan facility incorporated a linkage to two ESG KPIs that provide a discounted interest rate as the retailer meets its targets over five years.

The transaction turned heads, since it is among the largest loans ever made to a private company in Mexico, notably in the retail sector and with an ESG component. “Coppel was already very active in social, environmental and community development, so they wanted advice to take advantage of those strengths and improve their debt maturity profile,” explains José Jorge Rivero, Managing Director and Head, Corporate Banking, Scotiabank Mexico. “Now, they have a roadmap to continue to develop their ESG strategies, aligned with their growth plans.” 

Rivero says that Scotiabank’s ability to actively arrange, structure and promote the loan is thanks to collaboration among the Mexican Corporate Banking, Credit, Structuring teams, the Latam focused Sustainable Finance Group and the Latam-US Syndication Group: “This transaction highlights our connectivity across our Americas platform. Scotiabank has made a real commitment to our franchise, and we are today recognized as a key participant who can bring benefit to Mexico’s most important companies.”

Scotiabank’s broad capital markets profile in the Americas was also reinforced when the Republic of Chile was granted LatinFinance awards for both ‘Sovereign Issuer of the Year’ and ‘Local Currency Deal of the Year.’ Entering 2021 with a reputation as a pioneer in sustainable sovereign finance, Chile successfully completed multiple bond transactions denominated in US dollars and euros, with Scotiabank serving as Joint Bookrunner and Billing and Delivery Agent. 

Scotiabank also acted as Joint Bookrunner and Billing and Delivery Agent to the Republic when it launched a CLP1.6 trillion international bond offering of 8- and 13-year social notes denominated in Chilean pesos in 2020 – the first-time social bonds were offered by the Republic to international and domestic investors, resulting in high oversubscription rates and further diversifying the Republic’s CLP investor base. In July and December of 2021, Scotiabank acted under the same capacity for the Republic’s offering of 2024 and 2028 CLP-denominated social bonds for a total of CLP2.56 trillion. Overall, these international and domestic transactions were well received by a wide range of investors, reflecting the Republic’s resilience in the debt capital markets, as a frequent issuer and ample global investor appetite.

Reflecting on the range of award-winning transactions that earned Scotiabank accolades over the past 12 months, Stephen Guthrie discusses Scotiabank’s partnership approach, “It’s a privilege to partner with our clients and support them in achieving their business and financial goals across the Americas. At Scotiabank, we consistently bring our team’s full skillset, capabilities and energy to bear across our entire footprint to deliver the right solutions for our clients.”

 

For more information about Scotiabank’s Wholesale Banking solutions and opportunities across the Americas, please contact:

Randall Bingham 
Managing Director and Head, Media and Telecom Group, Corporate and Investment Banking

Phone: 212-225-5040

Stephen Guthrie
Senior Vice President, International Corporate and Commercial Banking

Phone: 416-863-7232

Juan Fullaondo
Managing Director and Head, Debt Capital Markets, Latin America & Caribbean

Phone: 917-769-6822

Jose Jorge Rivero Mendez
Managing Director, Corporate Banking, Scotiabank Mexico

Phone: 52-55-5123-2859

Daniel Gracian
Director, Sustainable Finance

Phone: 416-845-7906