Fitch has downgraded the outlook on the BB rating of Mexican hotel operator Grupo Posadas to negative from stable. The agency says exchange rate volatility has tightened the company’s liquidity as it requires it to post cash on margin calls related to positions held with derivatives. As of September, negative market value on derivative instruments totaled $11.1m, and a month after that, exposure had grown to approximately $50m. Cash required for margin calls at October 31 was approximately $33m. Fitch also says that it expects year-end results in the hotels segment to remain stable, as a depreciated MXP leads to improved performance in coastal hotels and Mexican destinations become more attractive from a cost perspective. In 2009, decreased global economic activity might affect performance and results, Fitch notes. Elsewhere, Fitch put Chile’s Empresas Iansa on watch negative and downgraded its foreign and local currency and $100m unsecured notes due 2012 ratings to BB minus from BB+. The agency says deteriorating financials in 2008 and weak profitability and cash flow as well as a substantial increase in debt levels as reason for the cut. For the first nine months of 2008, says Fitch, Iansa’s debt/Ebitda ratio was 15.1x compared to an average of 4.2x and 2.9x, respectively, between 2005 and 2007. As of September 30, short-term debt represented 59% of Iansa’s total debt, while cash and equivalents cover only 11% of short-term debt. The agency says that if sugar and juice concentrate businesses continue to trend down over the next few months, the company could have difficulty decreasing its leverage below 8.0x by the end of 2008. Meanwhile, Fitch cut ElectroAndina’s outlook to stable from positive and affirmed its local and foreign currency ratings at BB. The outlook revision, says Fitch, reflects the company’s increasing working capital needs, high contracted position under a context of natural gas restrictions for power generators, and uncertainty related to the ou
Yearly Archives: 2008
Moody’s Mulls CIE Downgrade
Moody’s has placed the Ba3 ratings of Mexico’s CIE on review for possible downgrade. The review, says Moody’s, is a result of CIE’s weakening liquidity position due to a drop in revenues and sizable near-term debt maturities. Affected is the company’s corporate family rating as well as that of the company’s $14m senior unsecured notes due 2015, MXN500m in certificados bursatiles due December 2009, MXP650m in certificados bursatiles due April 2010 and MXN1.4bn in certificados bursatiles due October 2010.
Argentina Seen Entering Recession
Argentina’s economy enter recession in the first half of 2009, according to Buenos Aires-based Torcuato di Tella University’s Financial Research Center. The university’s index, which measures the possibility of recession based on fluctuations in consumer spending, construction activity, stock exchange performance and other economic indicators, dropped 23% in October compared to the same month in 2007, the worst since 2002, says lead researcher Martin Gonzalez. Month-on-month, the index dropped 13.9%, its third consecutive monthly drop. “This variation is of a magnitude similar to what was seen during the worst months of the 2002 crisis,” says the researcher. The latest results of the index do not incorporate the effects of the nationalization of pension funds, which took place in November, but Gonzalez says it will negatively impact the next issue of the index, to be published in January, as investor confidence continues to deteriorate.
JPMorgan Slashes DCM Team
JPMorgan has cut at least three senior executives in its LatAm debt group as part of a 10% reduction in global headcount focused on investment banking. Mark Tuttle, MD and head of LatAm debt capital markets, has left the firm and Cynthia Powell, JPMorgan’s veteran head of LatAm syndicate, has also exited, say people familiar with the layoffs. Head of LatAm loan syndications Ricardo Rubio has also been let go, with at least another 3 heard departing from the debt group. Tuttle and Powell were formerly at Chase together and assumed senior roles at JPMorgan after the merger in 2001. The departures mark a significant loss for JPMorgan, which has tended to focus on large investment grade corporates in the region, including Cemex, Gerdau, Pemex, Televisa and Usiminas. The shop’s share of LatAm DCM has dwindled over the last 12 months. As of November 17, it had done 7 deals for $1.57bn in proceeds, down 57% from the $3.64bn it booked from 12 trades in the corresponding period of 2007, according to Dealogic. There was a 33% decline in market volume overall over the same timeframe. While the DCM outlook is indeed bleak for 2009, the shop is understood to have secured a lead role on Codelco, which is expected to be first out the gates with a $500m-$700m bond when markets reopen. It was also expected to increase activity in liability management to counter the downturn in financing. And JPMorgan recently arranged large acquisition loans for VCP’s takeover of Aracruz, which has been suspended, and Magnesita’s acquisition of LWB in Germany, which has closed but awaits regulatory approval. A JPMorgan spokeswoman declines to comment on specific layoffs.
Titularizadora Colombiana Places MBS
Colombian securitization shop Titularizadora Colombiana has sold COP236bn ($100m) worth of MBS locally with institutional investors. The 2018 notes have an average life of 2.2 years and were priced at par to yield 5.99% over the UR inflation-linked index, says Mauricio Amador, vp of finance at Titularizadora. The rate was determined through an auction held Wednesday, whose maximum level was 6.50%. The notes are backed by mortgages originated by Bancolombia, AV Villas, Colmena and Davivienda. Half the issue was done Wednesday with pension funds, trusts and financial institutions, while the remainder will be underwritten and placed with banks, including those who originated the mortgages. The 2018 senior notes are rated AAA on a national scale. Nine Colombian banks and brokers served as placement agents. Titularizadora is considering issuing another batch of MBS before year-end, says Amador. The deal would involve the sale of fixed rate notes and likely be larger than yesterday’s $100m issue.
Colombia’s ISA Readies Local Bonds
Colombian state-controlled electricity grid operator Interconexion Electrica plans to sell COP100bn ($43m) in 2026 bonds today. The issue is a reopening of a bond originally sold in 2006, and pays interest at the UVR inflation rate plus 4.58%. The bonds could be offered at a discount, Gonzalo Maya, director of financial resources at ISA, tells LatinFinance. He adds that ISA can sell up to COP130bn if it chooses. Proceeds will go towards working capital. Citi, Correval and Bancolombia are managing the sale.
Fonacot Preps Loan Securitization
Mexico’s state-run lender Instituto Fonacot aims to sell MXP2.1bn in 2010 bonds backed by consumer loans as soon as next week. The bonds will pay a spread over 28-day TIIE and proceeds will strengthen Fonacot’s lending capabilities. Scotia is managing the sale, the second from a program allowing securitization of loans made to Mexican workers to purchase consumer goods such as appliances. In February, Fonacot priced MXP2bn in 2011 bonds at TIIE plus 3bp.
Brazil Petrochem Ready to Delist After Buyback
Quattor Participacoes, the holding company for petrochemicals producer Petroquimica Uniao, has repurchased 95.33% of Uniao’s outstanding shares for BRL271.6m. It paid BRL15 each for 6.5m ordinary and 11.1m preferred shares. Quattor plans to delist Uniao, now that it possesses more than 99% of the share capital. Uniao’s ordinary shares closed Wednesday at BRL15.39.
Mexico Says Basta to Subasta
Mexico’s central bank refused to pay what investors offered for up to MXP15bn in off-the-run government bonds at auction Tuesday, electing not to buy any. Investors offered to sell MXP8.6bn in 8% of 2013 bonds at MXP97.3-MXP98.4. They offered MXP103.6-MXP104.7 on MXP10.3bn of 9.5% 2014 bonds and MXP95.8-MXP97.4 on MXP5.8bn in 8% of 2015s. The deal was to have been the first in a series of auctions to repurchase domestic bonds with 10-30-year maturities, as part of a MXP40bn liquidity stimulus plan. The government did not give any indication as to the status of future buybacks under the program.
TI to Raise Stake in Argentine Unit
Telecom Italia executives say the company will exercise its call option to increase its stake in Telecom Argentina next year. The Italian company owns 50% of Sofora, Telecom Argentina’s majority owner, and plans to take over the remaining half, which is 48% owned by the Werthein Group, while France Telecom has the remaining 2%. The executives say that once the option has been exercised, Telecom Italia will bring in a local partner who will take on a “significant” portion of the new stake, which they say is worth up to $180m. Telecom Italia also has announced that it is cutting 4,000 jobs and selling non-core assets to raise up to EUR3bn to pay down EUR37bn in debt. While it does not specify which assets are for sale, it does say that only the Italian and Brazilian markets are considered core.