Category: Mexico

Mexican glassmaker Vitro has received $100m through a structured transaction from Bancomext, allowing it to continue operating normally, it says. Vitro has placed non-productive real estate assets into a trust to guarantee repayment. After a 3-year period, it can chose to either sell the assets or reacquire them and repay the $100m plus a one-time finance charge of Libor plus 500bp. The advantage of the structure, a spokesman tells LatinFinance, is that the funds received do not add to its debt. The spokesman declined to give the value of the assets involved, noting only that they totaled more than $100m. The proceeds will be used to maintain normal operations. Vitro says it is still in negotiations with its derivative counterparties, and has contracted the Blackstone Group to advise it. Its liquidity position was pinched last month when it revealed a $230m negative position in derivative contracts.

Telmex Internacional, the unit of Telmex, has filed for a new MXP10bn five-year local bond shelf. The issuer rated AA on a local scale did not specify use of proceeds. Inbursa is managing the program. After being spun off in a $16bn transaction in June, Telmex Internacional was expected to translate its large cash position into acquisition activity and aggressive organic growth in markets such as Argentina, Chile and Brazil.

Cemex, once one of LatAm’s bluest of industrial blue chips, has lost its investment grade rating from Fitch. The agency has downgraded the Mexican cement maker to BB+ with a negative outlook, from BBB minus, citing high leverage levels, reduced liquidity and weaker than expected operating results. “While the company has been able to reduce debt by close to $3.0bn since the Rinker acquisition, leverage remains higher than originally anticipated,” says Fitch. On September 30, Cemex had total adjusted debt of $23.3bn. Cemex’s liquidity position is also tight: it faces maturities of $5.7bn next year, notes Fitch. Still, some investors view the credit as a solid name to be holding. “I don’t have any fears that they are going to default,” says one buysider, noting that the rash of recent downgrades in LatAm simply means tighter covenants and more secured issuances going forward.

The Mexican government plans to buy back up to MXP40bn in fixed-rate UDI and peso-denominated bonds with maturities from 10-30 years. The scheme is intended to complement measures announced last week to restore liquidity to local markets, including a reduction in issuance of long-term debt in Q4 and an increase in issuance of short-term Treasury bills, the finance ministry says. It does not specify when or how. “It is not clear why they need to do this when the local markets were responding to what they have already announced this week,” Alonso Cervera, head of non-Brazil LatAm economics at Credit Suisse, tells LatinFinance. He notes that rates on 10, 20, and 30-year bonds fell from around 920bp to 875bp on today’s news. Cautioning that much will depend on the mechanism of the buyback, Cervera says the program could aid the market by offering investors an opportunity to exit the bonds at high prices. Mexico’s public credit department was not immediately available for comment.

Office Depot has rejected an offer from Gigante to buy Office Depot’s 50% stake of their Mexican joint venture, Gigante says. Gigante put up an unsolicited non-binding offer of $430m in July for the remainder of their Office Depot de Mexico chain, but did not say why its bid was turned down. Gigante says it continues to discuss alternatives with its partner.

Moody’s has downgraded Ford Credit de Mexico to Baa3 on a national scale from Baa1, following a downgrade of the parent. The ratings remain on review for further downgrade. Ford announced that the Mexico unit’s CEO Louise Goeser has decided to retire effective November 1, to be replaced by COO Eduardo Serrano. Separately, Moody’s placed the B2 grade of GMAC Brazilian unit Banco GMAC on review for possible downgrade, also following a downgrade to its parent. “The gradual deterioration of GMAC ‘s stand-alone credit profile has contributed to higher funding costs for Banco GMAC that already pressured its profitability indicators in the first half of 2008,” the agency says.

Mexican retailer CCM’s main operating unit has taken out an MXP3bn credit line with Nacional Financiera and a MXP327m bank loan. Proceeds will be used to pay suppliers while the holding company restructures debt. Both facilities pay TIIE plus 5bp. The move comes after a Mexican court Tuesday denied CCM the possibility to enter into a concurso mercantil protection process, under which a company can devise a binding financial restructuring plan with 51% support of outstanding debt holders. The company still plans to pursue protection alternatives. CMM defaulted on debt payments earlier this month, after reporting $1.1bn in exchange derivatives loss. Credit Suisse is advising it on the restructuring of some $2bn in debt.