Category: Bonds

With domestic liquidity growing and a favorable macro environment in the forecast, Mexican DCM bankers expect an increase in local bond issuance in 2013. So far this year, issuers have raised more than MXP207.0bn ($16.2bn) domestically, up from the MXP152.0bn seen in 2011, according to LatinFinance data, which excludes short-term issuance. Mexican financial institutions and government-related issuers are expected to account for a lot of the activity next year, with securitizations in particular already building up from a backlog at the end of this year. “Given stability in Mexico’s local market and low global rates, we feel that it is a good time to take advantage of those low rates,” says a Mexico City-based DCM banker. For Mexican corporate borrowers, especially those that fall within the AAA-rated category, spreads continue to look more favorable, remaining stable or tightening, he notes. Significant corporate refinancing needs will also be a factor driving volume. Low costs should continue to pave the way for high-quality issuers, says a Mexican portfolio manager, highlighting that development banks Nacional Financiera (AAA) and Banobras (AAA) were seen printing as little as 50bp over the Mexican sovereign. He adds that he would like to see more paper from the financial sector in 2013, as well as ABS, highlighting the state of Veracruz’s November sale as a standout this year. More securitizations are planned, bankers say, though they note that spreads widened in 2012 for ABS deals, given the number of sizeable securitizations that emerged over a short period of time towards the end of the year. “The Veracruz transaction was important and could pave the way for additional Mexican states that need to refinance bank debt,” says a banker away from it. The state sold a MXP4.86bn three-tranche securitization of future federal payment flows, with a partial guarantee from Banobras, and other states may follow. Bus operator IAMSA and the Monterrey-Saltillo toll road conc

Mexico’s Banco Compartamos is scheduled to price a reopening of its 2015 floating-rate domestic bonds today. The microlender wants to reopen the bonds for MXP1bn ($78m), an amount that would bring the new outstanding size to MXP2bn. This amount would complete a desired MXP2bn outstanding size for three separate transactions done in 2010, 2011 and 2012 under an MXP6bn program. Price talk is at TIIE+59bp-area. Proceeds will be used to refinance short-term indebtedness. Banamex is leading the transaction, rated AAA/AA on a national scale. The original MXP1bn bond priced at TIIE+130bp in 2010.

After a groundbreaking debt fundraising year, Pemex is targeting issuance in more new markets in 2013, its treasury manager says. The Mexican state-owned oil company has put in a request to borrow about $9.8bn-euqivalent in 2013, subject to government approval, with about $4.0bn expected to come from the international markets. After hitting up the Swiss market and becoming LatAm’s first Australian dollar issuer this year, other non-USD markets may be in the cards. “We would certainly look at the Euro market as we do every year and we would look at some currencies in Latin America. The swap to dollars makes it difficult to structure those trades, but Pemex could turn to South American currencies like in Peru or Colombia which might make sense in our funding program,” Mauricio Alazraki tells LatinFinance. It is not necessary to go to non-USD markets, the official adds. In the dollar markets, a retap of its 2044 USD bond is a distinct possibility, he says, after raising $3bn from it this year. Like other Mexican blue-chips, Pemex would like to take advantage of growing investor appetite for domestic peso debt. “We aim to tap the domestic market more frequently, ideally every quarter to give the market more certainty,” he says, noting that $2.5bn-$3.5bn-equivalent would be ideal next year. Using its successful GDN format to tap both foreign and local buyers is among the options, though the global peso securities debuted by America Movil this year also give borrowers another option. “Titulos de credito extranjeros is a great program and we have to see if that is a way to go or to work on our GDN format and provide it with more liquidity. There are similarities in terms of documentation. One of the advantages of the GDN is that it is easier to identify amount to withhold. Obviously what America Movil did was a great transaction,” Alazraki says. Pemex would also like to have $1.5bn-$2.0bn from ECA funding next year, including a possible revisit of its US Ex-Im backed bonds

Mexico’s Grupo Kuo has received acceptance from holders of $230m, or 92.12%, of its $250m 9.75% 2017 bonds targeted in a tender offer, it says. The BB rated conglomerate’s acceptance rate at the December 14 deadline was only slightly higher than the $229m it had at the November 30 early deadline. Grupo Kuo offered holders $1,053.75 cash per $1,000 principal through the early deadline, and $1,023.75 per $1,000 through the final deadline. Credit Suisse managed the tender, and was joined by Citi and Bank of America Merrill Lynch on the sale of new 2022 NC5 bonds issued to fund it. The new 2022 bonds priced at par with a 6.25% coupon last month.