Mortgage lender Hipotecaria Su Casita is preparing up to MXP2bn in 2033 RMBS denominated in the UDI inflation-linked unit. About 10% of the bonds will be in a subordinated tranche. The senior tranche could price at 150bp-160bp over the UDIbono, according to bankers on the deal. The AAA rated transaction is set to price Wednesday and managed by Santander and HSBC. Separately, ING Hipotecaria plans to sell MXP750m in 2011 floating-rate bonds the same day. The transaction is expected to price at around TIIE plus 40bp-50bp. Proceeds will repay maturing debt. Santander is managing that sale.
Yearly Archives: 2008
Posted inDaily Brief
LatAm Equity Funds Make Decent Return
LatAm equity funds returned 1.28% in the week ended April 10, according to Lipper. China region funds sank 0.46%, while EM funds rose 1.26%. The biggest gains were made by gold oriented funds with 2.08%, while Japanese funds dropped the most, with a loss of 3.11%. LatAm outperformed the world equity funds group, which overall sank 0.30%. They are up 3.11% year-to-date.
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LatAm, Brazil Equity Funds See Inflows
LatAm equity funds took $182.8m in new funds in the week ended April 9, according to EPFR Global. Brazil equity funds also received $42.4m, raising total assets under management for that country by 3.1% to $13.7bn. The positive performance was echoed more broadly in EM, with GEM equity funds posting their best week in 2008 following two consecutive positive weeks. “Our daily fund flows data indicated something of an inflection point for emerging markets funds during the last week of March and a clear one for Europe equity funds on April 2,” says EPFR MD Brad Durham. EMEA equity funds, however, were negative for the fourth time in the past five weeks on concerns of current account deficits in places like Turkey, South Africa and Eastern Europe.
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Mexican Miner Takes IPO to London
Penoles, the Mexican mining giant, plans to carve out its precious metals unit, to be called Fresnillo, and list it on the London Stock Exchange. The total offering, slated for May, is estimated at roughly $2bn and will include $900m worth of primary shares, say executives close to the process. JPMorgan Cazenove is the lead on what the issuer says will create the world’s largest primary silver producer. The decision to list in London is an unfortunate one for LatAm exchanges like the Mexican Bolsa, or the Bovespa-BM&F, which would have benefited from such a high profile and sizable deal. The latter has made no secret of plans to consolidate LatAm liquidity on a single platform. “The decision to list in London was made a while ago, and based on the fact that other big mining names such as BHP Billiton, Rio Tinto and Anglo American are listed there,” says a banker familiar with the deal. Peru’s Hochschild Mining listed itself on the LSE in 2006, also via JPMorgan. The deal is timed to coincide with record highs for gold and silver, the company’s main metals. “They’re carving it out to realize untapped value in the company,” says a banker close to process. He notes that within Penoles, the operation has a lower multiple than it would on a standalone basis. Citi, Canacord Adams and UBS will be co-managers on the equity deal. Peñoles intends to retain at least 75% of the ordinary shares of Fresnillo plc on completion of the offer.
Posted inDaily Brief
Penoles Plots Debt Refi
Penoles, the Mexican mining giant, plans to restructure about $550m in long-term debt in order to better position its books for a spin off of Fresnillo. It aims to sell new debt in order to repay an 8.39% of 2012 structured silver payable notes issue and other senior unsecured debt. The IPO will result in significant cash in-flows to Penoles, which will also get MXP4.26bn from the precious metals business through a combination of a dividend and a capital reduction. Part of this may be distributed to Penoles’ shareholders depending on cashflow needs. CEO Jaime Lomelin, vp of mining and chemicals Manuel Luevanos, CFO Mario Arreguin, and vp of exploration David Giles will step down from their posts at Penoles and become CEO, COO, CFO and vp of exploration, respectively at Fresnillo, Penoles says. “Penoles will retain between 75% and 77.3% of the ordinary shares of Fresnillo plc depending on whether the over-allotment option is exercised or not. In doing so, Penoles expects to create value for its shareholders and personnel and for Mexico,” says the issuer. The other unit of the firm, Minas Penoles will focus on non-precious metals business. A listing without float will also be obtained on the Mexican Stock Exchange for Fresnillo. As of December 2007, Penoles says Fresnillo mines, development projects and exploration prospects had 291.1m tons of attributable mineral resources yielding 837.0m ounces of silver and 9.4m ounces of gold.
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Social Spending May Dent Brazil: Fitch
A measure approved by the Brazilian senate Wednesday that increases social security and other expenses could hurt the country’s efforts to contain the social security deficit and undermine the country’s fiscal credibility, according to Fitch. “Moreover, increases in current spending could increase budgetary rigidities, potentially leading to a further deterioration of the quality of Brazil’s spending,” The agency adds.
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Mexico Looks to Promote UDI Liquidity
After a successful dollar debt offering in January, the present volatility in the credit markets has Mexico focused on cleaning up its peso debt curve, head of public credit Gerardo Rodriguez tells LatinFinance. Among new initiatives is one aimed at strengthening liquidity in the bonds denominated in the UDI inflation-linked unit. “Mexico has a long tradition of inflation-linked instruments, which now represent 13% of our local market,” Rodriguez says. “We think we have conditions for that market to be more liquid.” Mexico introduced a 3-year Udibono last year and stopped issuing 20-year Udibonos to focus on 3, 10 and 30-year points on the curve. It plans to incorporate the securities into a successful market makers program. Boosting liquidity was also the motivation for including UDIs in the most recent, well-bid exchange warrants transaction, he says. “The country’s infrastructure program will require the intensive use of the local capital markets, and the inflation-linked instruments need more efficient pricing,” says Rodriguez.
Posted inDaily Brief
T&T Says No Plan for Sovereign Bond
Trinidad & Tobago has no plan to return to the markets with a sovereign issue, Vishnu Dhanpaul, deputy permanent secretary of the country’s ministry of finance, tells LatinFinance. However, the government expects to assist and act as a guarantor for government-owned entities. An issue from the rapid rail system of Trinidad will happen in 2009, Dhanpaul states, while deals for the water and sewerage authority, the Power Generation Authority of Trinidad & Tobago, as well as oil and gas companies NGC and Petrotrin are in the works, Dhanpaul says. He adds that no date yet has yet been set. The last time T&T issued a sovereign bond was in 2000, with a refinancing in 2006 for EUR150m. In a recent interview with LatinFinance, NGC president Frank Look Kin says his firm company does not have need for a government guarantee to access financial markets.
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Chile Holds on Rates
Chile has kept its benchmark interest rate unchanged at 6.5%, the country’s central bank announced Thursday, citing the US crisis and pressures in the global credit market, as well as reduced dynamism in Q1 economic activity. “The central bank seems, admittedly, more concerned with the appreciation of the CLP than with non-tradable inflation, flirting with 10% yoy when the target is 3.00%, while the policy rate is still a neutral 6.25%” Goldman Sachs says. “We believe this is not prudent and we remain of the view that the central bank should not subordinate the still very challenging inflation objective to a growth or exchange rate objective,” the shop says.
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S&P Sees Mexico Mortgage Risk
As investors in Mexico rethink their appetite for risk, mortgage companies are feeling the pinch, according to S&P. “For this year, we expect lower growth rates and pressures on profitability levels,” says S&P credit analyst Francisco Suarez. Market sentiment has changed dramatically and exhibited two of the industry’s clearest vulnerabilities: its reliance on volatile funding sources and limitations to adequately manage market, funding, and liquidity risks. “These factors have been reflected in increasing refinancing risk for the industry,” says the agency.