Category: Corporate & Sovereign Strategy

Fitch has moved the ratings of Mexico’s Durango up a notch to CCC from D as the company concluded its debt restructuring. It also assigned a CCC/RR4 rating for its 2016 notes and affirmed and withdrew the CC/RR4 rating on its 2017 notes. As a result of the restructuring Durango’s total debt will drop to $263m from $522m, but Fitch says leverage is still high. Durango generated $21m of Ebitda during 2008, a sharp decline from $95m in 2007 and $114m in 2006. The decline was primarily driven by higher costs for energy and recycled fiber, while prices remained relatively stagnant, Fitch says.

Mexico’s Gruma has agreed with creditors to extend until September 21 the deadline for completing a deal to turn $727m in derivatives losses into loans. The extension is the second for the tortilla maker, which says it remains in negotiations with creditors. It agreed in July to convert $727m in FX derivatives losses into 3.0-year and 7.5-year loans. Goldman Sachs is advising Gruma.

Argentina’s Transportadora de Gas del Norte (TGN) has again pushed out the deadline for investors to participate in a debt restructuring offer, to October 15, from a previous deadline of Tuesday. The gas distributor has offered investors the option to exchange some $347m in 2012 bonds for new 2021 notes paying 2%-6%, or receive cash at a 75% discount to face value. It has received acceptance from holders representing 12% of the debt, it says. TGN defaulted on a $22m debt payment in December, leading the government to intervene in the company.

Jamaica has decided against a restructuring proposed by holders of its $7 billion in domestic bonds, opting instead to rely on an expected package from the IMF to help cover the debt burden. “Cabinet, after careful consideration of the proposal and mindful of the uncertainty in the market has decided that the government will not be pursuing this proposal,” finance minister Audley Shaw says in a statement. A group of Jamaican banks had proposed to restructure the sovereign’s short-term domestic debt, say foreign investors holding the sovereign bonds. “Discussions in the market about this initiative raised concerns about the government’s debt strategy,” says Shaw. Domestic liabilities account for 55% of the sovereign’s total debt, which stood at 106% of GDP as of March, according to Fitch. GDP was $12.2bn in 2008, according to the US state department. Jamaica plans to use a $1.2bn stand-by agreement with the IMF, under negotiation since the spring, to ensure ability to meet payments. “The proposed stand-by agreement with the International Monetary Fund will ensure stability in our balance of payments,” says Shaw. “The government is taking the necessary steps to deal with its fiscal challenges,” he adds. Fitch calls securing the agreement “critical” given increased external vulnerabilities, weak fiscal profile and rising interest burden. “The agreement with the IMF could likely get it through until 2011,” says a US-based investor holding Jamaica, noting that a restructuring seems unlikely in the near future. The sovereign’s 8% 2019 bond – trading recently in the high 70s – was unchanged on the news, according to traders. Fitch rates Jamaica B with a negative outlook. The sovereign has long prided itself on the fact that it has always honored the national debt.

BBVA has shifted two executives internally as it looks to expand its regional corporate finance platform, which specializes in M&A, restructuring, and private capital raising. Enrique Romo, a managing director who joined from Lehman brothers in January, will be based in Mexico City and be responsible for Mexico and Central America. Efrain Lopez, also an MD, will to New York where he will cover North America, from Mexico City. Lopez joined BBVA from Standard Chartered last year. Both report to Pablo Rivas, MD and head of Americas at BBVA. Romo tells LatinFinance it is considering making new hires as the platform expands. BBVA’s corporate finance group worked on Cemex’s recently completed restructuring.

As of late Friday, Cemex was heard to have clinched 99.7% of the required verbal approvals for its $15bn restructuring, with one final Spanish lender representing a $40m ticket expected to agree to the deal over the weekend. As such, bankers are said to be more than confident that the deal will one way or another achieve the required 100% approval, and it has now become matter of formalities. There is a distant possibility that the lone lender could still delay the process, triggering a new round of calls, though that is seen as unlikely. Banks are being asked to submit signed agreements by Tuesday at the latest to allow Cemex to process documentation to try and meet its August 14 deadline, says a banker. An announcement to creditors on the success of the transaction from Cemex’s top group of banks that includes Citi, BBVA, Santander, BNP, HSBC and RBS, was expected as soon as Sunday. Cemex could follow with a notice to the market, though it may hold off until documentation is finalized.