Category: Mexico

Mexican retailer Liverpool is planning to sell up to MXP1bn in fixed or floating rate peso-denominated bonds, according to regulatory documents. It does not communicate the maturity or expected sale date. Proceeds will be used for working capital and general corporate purposes. Banamex is managing the sale. Liverpool last hit local markets in December, raising MXP4bn in 2014 bonds at TIIE plus 4bp via Banamex and HSBC.

S&P has revised the rating outlook on Mexico’s Nemak to negative from stable. The agency is concerned by the high debt levels the auto parts maker maintains amid a deteriorating global auto industry. Its A+ national-scale rating could be lowered, it said, if Nemak’s debt-to-EBITDA ratio – now at 3.9x – remains above 3.3x for the next year, or if its operating cash flow becomes negative.

Fitch has chopped Mexico’s Corporacion Durango to CC and keeps it on negative watch amid continued deterioration in the business and financial profile. “Prices for these two key components of the company’s cost structure are not expected to abate in the near future, which heightens risk that the company will not be able to meet its near-term debt obligations,” says the agency. Durango ended June 30 with $35m in cash and marketable securities and $12m of short-term debt. On October 5, the company is scheduled to make a $26.5m coupon payment on notes due in 2017. The rating implies recovery in the event of default of 31%-50%.

Mexican bottler Coca-Cola Femsa and the Coca-Cola Company have acquired Colombian water bottler Brisa from Bavaria, a subsidiary of SAB Miller, for $92m. The purchase includes the Brisa brand and its production assets, Femsa adds. Brisa sold 47 million unit cases in 2007 in Colombia, according to Femsa. Both acquirers equally share the purchase price which is subject to adjustment based on the performance of the business, Femsa states. The Mexican bottler will use its own cash to pay for Brisa and no banks are involved in the transaction, a company spokesman adds. In June, Femsa purchased Brazilian bottler Remi for $364m.

Mexico’s Cemex is exploring the sale of some of its Australian assets, including 16 concrete pipes and products manufacturing facilities that operate under the Humes brand name. Proceeds from asset sale would be used for debt reduction, Cemex adds. Humes sold over 580,000 tons of products in 2007, generating revenues of approximately A$255m ($234m) Cemex says. The company has tapped Merrill Lynch as its financial advisor for the divestment.

Mexican infrastructure firm Pinfra has won a MXP770m contract to build a 48km highway in northern Mexico. The road will connect the towns of San Luis Rio Colorado and Estacion Doctor, both in the northern state of Sonora near the US border, Pinfra says. Pinfra’s contract is for 30 years and includes the right to build, maintain and operate the highway.

S&P has revised its outlook to negative from stable on the global scale rating of FSA Seguros Mexico, amid troubles at the parent company in the US. “The negative outlook on FSA reflects the possibility that the FSA franchise has been damaged by the newly announced losses and that acceptance in the municipal market may diminish,” says S&P analyst Alfonso Novelo. “Although FSA’s first-half 2008 production results were very strong, in our view, FSA’s position as one of the better bond insurance underwriters may now be tarnished.” The outlook on the national scale rating remains stable, and S&P affirms the AAA global and national scale ratings.

Mexican hotel chain Posadas faces a comfortable debt maturity schedule, according to Fitch, which affirms the credit and its senior notes due 2011 at BB (stable). “The company has continued to perform positively, steadily growing its number of rooms while maintaining occupancy rates stable and increasing revenue per available room,” says Fitch. The ratings reflect the company’s solid business position, strong brand name and multiple hotel formats. The company recently issued approximately $73m in local markets to refinance upcoming maturities and existing debt, improving its debt profile while also reducing funding costs. As of June 30, on-balance sheet debt reached $399m of which 80% was dollar-denominated and the remainder was in MXP, says Fitch. Short-term debt represented 15% of the total, and Posadas also had approximately $194m in off-balance sheet debt related to hotel leases. “The company has comfortable liquidity with a balance of cash and marketable securities of $43m,” says Fitch.

Mexican president Felipe Calderon has named Gerardo Ruiz Mateos as economy minister, the Mexican government said. Ruiz was formerly Calderon’s chief of staff and replaces Eduardo Sojo, who has been appointed head of the government statistics agency. “Inflation will be high in his agenda,” says Goldman Sachs of the new minister.

Mexico will likely hike the overnight rate by 25bp to 8.25% August 15, according to Credit Suisse, following a larger-than-expected upward revision to base-case inflation. “Additional rate hikes will depend on the dynamics of market inflation expectations,” says Credit Suisse. “The latest market survey showed that the median forecast for the overnight rate at year-end 2008 is 8.25%,” it adds. It projects headline inflation will rise 0.53% month-on-month, while core inflation will increase 0.42% in August.