Category: Corporate & Sovereign Strategy

Cemex’s $15bn bank debt refinancing, concluded in August, has been ruled by ISDA to have constituted a “restructuring credit event” because it resulted from a deterioration in the creditworthiness of the issuer. The decision, which was made by an external review panel appointed by ISDA and announced Monday, will primarily impact writers and holders of Cemex CDS, and will likely have zero effect on Cemex’s own cashflow or credit quality, according to analysts eyeing the credit. “Sellers of CDS protection are likely to experience some degree of loss, while buyers of protection are likely to gain,” writes Deutsche Bank in a report on the matter, adding writers will have to pay out their counterparties while CDS buyers will have to deliver the underlying debt or settle on a cash basis. But ISDA has not yet determined which instruments are deliverable into the CDS, says Deutsche, which lists the company’s securities as including 4 classes of perpetuals, 2 dollar notes and one euro issue. The shop expects that decision within a month.

Argentina’s Metrogas will hold a shareholder meeting December 16 to “consider its next steps,” it says. A default or restructuring of its $225m debt has been expected as the utility’s financial metrics weaken due to increasing operating and financial costs. The company has for years been trying to get regulators to raise tariffs. “Metrogas’ problem is not one of too much debt but one of upcoming debt maturities,” Barclays says in a report. The shop notes the easiest solution would be continue interest payments while it reaches out to creditors.

Mexico’s market regulator has fined Comercial Mexicana (CCM) $3.8m for not fully revealing hefty derivatives trades that led it to default, though it saw no sign of wrongdoing on behalf of the company. “CCM maintains a dialogue with everyone involved in the restructuring process, which continues to advance favorably,” says the issuer. Comerci says it paid only MXP39.2m of the original MXP49.0m fine after receiving a discount for quick payment. “We view this development as another step forward in the restructuring process,” says Barclays, which notes that the company or its management team or shareholders could have been found liable. It adds that at current bond prices of 54-55, Barclays believes downside is limited and that a better deal is necessary for unsecured creditors to come into the fold. “Bondholders could see more than 10 points of upside potential at current levels,” says the bank. The Mexican retailer launched a MXP1.5bn exchange offer to local bondholders, as part of its restructuring deal. CCM is offering new 7-year floating-rate notes over TIIE, on a 1-for-1 basis, in exchange for 5 outstanding series of domestic bonds sold in 2008. Comerci aims to restructure $1bn-$2bn in liabilities after racking up more than $1bn in derivatives losses last year.

Holders of Mexico-based CIE’s 2006 notes due on December 4 have approved a debt restructuring plan, which includes bond and bank-related debt with maturities ranging from December 2009 to December 2011, according local equities research shop Actinver. In exchange for extending tenors, bondholders are heard to be receiving a higher yield, which will settle at around 300bp over TIIE, compared to the previous 179bp, according to the shop and local press reports. In addition, the entertainment company has offered bondholders shares in its subsidiaries that account for slightly more than 60% of consolidated Ebitda. Actinver says holders of CIE’s 2008 notes have not yet met with the company to discuss terms of a potential plan.

Fitch has assigned Transportadora Gas del Norte’s $247.3m exchange offer a CCC rating, it says. In the exchange, $247.3m in new 7-year notes are being offered to existing holders as part of its plan to restructure $347.3m in debt. It is offering investors new 2016 bonds paying 6.50% rising to 8.50% over the life of the notes, or a cash payout of 40 cents on the dollar for up to $40m. TGN’s total debt would be lowered by $100m through the offer, Fitch says, with short-term debt service significantly lowered for the first four years. “However, as principal amortizations begin in year five, absent tariff increases or other factors that add to positive cash flow, which remain highly uncertain at this time, cash flow would likely become negative and could result in pressure on credit quality and add to financial distress,” the agency says. TGN announced 87% acceptance in mid-October. Argentine gas regulators intervened in the management of TGN following a December 2008 default. Barclays is advising TGN.