Category: Mexico

Fertinal, a privately held Mexican fertilizer producer, is seeking capital to restart operations and considering a number of options, including private equity and debt placements, say people close to the company. The Michoacan-headquartered producer, owned by the Covarrubias family, ran into trouble over the past several years and is emerging from bankruptcy. It hired UBS to advise on financing and strategic options, say executives familiar with the plans. A banker away from the company speculates that Fertinal’s enterprise value could be north of $2bn, while people closer to the firm say it has yet to provide production and revenue figures and any guess at values will be off the mark.

Moody’s has upgraded Minera Mexico’s senior unsecured rating on $56.4m on Series B notes due 2028 to Baa2 from Baa3. Moody’s also affirmed the Baa2 senior unsecured ratings of its parent, Southern Copper Corporation (SCC). Both have stable outlooks. The upgrade of Minera’s senior unsecured rating reflects the company’s materially reduced leverage profile following the repayment of $150m in April 2008, and improved financial metrics and free cash flow generation capacity as its operations benefit from the continuation of strong copper prices. “Given the improved performance at the mine and metallurgical operations, and the lower interest burden on the company, Moody’s expects Minera to continue to evidence acceptable coverage ratios even in a copper price downturn and despite the current lack of production from the Cananea mine, which is closed due to labor difficulties,” the agency adds. It also notes vulnerability to higher operating costs, expansion capital expenditure requirements, potential for aggressive dividend payment requirements by either SCC, or its parent, Grupo Mexico as well as the labor and political landscape in which Minera operates.

Mexico’s privately held Grupo R is set to secure a $600m 7.5-year syndicated loan to help finance the construction of La Muralla III, Mexico’s first deepwater drilling platform, say bankers close to the deal. The platform will cost up to $800m and is being financed with 75% debt and 25% equity from the sponsor. Leads WestLB and BBVA have provided Grupo R with a $150m bridge at an undisclosed rate to kick start construction. That will be eventually be fully refinanced with the $600m loan, which carries a single margin of Libor plus 175bp throughout the 2.5-year construction and 5-year post completion periods. Six other banks are heard to have joined the syndication. Post completion, Pemex is the offtaker for the first 3 years of the transaction and could renew the contract for the remaining 2 years, say bankers. Funding will be distributed to the sponsor as it completes construction milestones. La Muralla III represents an important first step for Pemex as it heads into deeper waters to replenish falling reserves. Other similar deals are likely to come in the future from Mexico, say bankers involved in the sector. Elsewhere in LatAm, there is activity on the near-term horizon. A number of platforms have been started for Petrobras, and several more are heard seeking financing in the coming months as the Brazilian company seeks to explore new discoveries.

This week’s takeover of Mexican mortgage lender Su Casita by Spain’s Caja Madrid should not affect issuance by one of the most active MXP bond market borrowers. “For now I think we are going to stick with what we presented at the beginning of the year. We are still going to rely on debt capital market issuances, this really doesn’t change that much,” Hipotecaria Su Casita CFO Mark Zaltzman tells LatinFinance. At the beginning of the year, the issuer had indicated plans to do $800m-$1bn-equivelant in RMBS by the end of the year. It has so far placed MXP1.9bn via an April issue. However, the official cautions that the overall outlook may require some revisions, suggesting a reduction in issuance at some stage. “We know that growth isn’t going to be as high as we expected at the beginning of the year. Sadly this is a result of a very volatile market and conditions are continuously changing,” says Zaltzman. Su Casita’s mortgage lending will likely be hit by market volatility, but the CFO sees benefits coming from its new ownership. “The Caja Madrid acquisition is only good – with volatility you need strength,” says Zaltzman.

Mexican mortgage lender Su Casita says it sees upside in this week’s sale to Spain’s Caja Madrid. “You’re going to see a much more developed financial institution from Su Casita,” Hipotecaria Su Casita CFO Mark Zaltzman tells LatinFinance. “We’re going to be in a much better position to make a decision about what other products if any we’re going to be getting into,” he adds. Caja Madrid took complete control of Grupo Su Casita this week with the purchase of the 60% of the shares it did not already hold, for an estimated $340m. Zaltzman declines to comment on the price. Local investors are encouraged by the transaction, which they see as a vote of confidence in Mexico. “This is another good sign, in the face of a global crisis in the housing sector,” says Tonatiuh Rodriguez, head of investment at Afore XXI. “It’s a fair price and it must have good potential,” adds the investor, who has $5bn equivalent under management. Zaltzman views the deal as part of the development of Su Casita from a Sofol to a more diverse financial institution and does not rule out an eventual move into banking. “Financially we now have more potential . . . this is a very competitive environment and you need strength,” says the CFO. The official also expects to keep his job. “Caja Madrid expressed that they were going to retain management for the time being,” says Zaltzman. The final sale is still subject to Mexican and Spanish approvals. “We expect these approvals to take place in the next 90 days,” says Zaltzman. Su Casita shareholders were advised by Credit Suisse.

Mexico’s Grupo Ixe has decided not to continue with negotiations to by 100% of GMAC Hipotecaria and GMAC Financiera. The two sides did not state reasons for the termination. Discussions between Ixe and GMAC’s troubled American owner Residential Capital began in late May. At the time of the announcement, ratings agencies expressed concern about the high amount of leverage the combined unit would have. Ixe said it intends to continue searching for growth alternatives. The Mexican mortgage sector, largely free of the problems plaguing US housing lenders, is an attractive sector for foreign and domestic institutions. This week Caja Madrid agreed to buy 60% of Su Casita for $342m. S&P affirmed the GMAC units’ national scale ratings at B, and Ixe’s at A minus.

The Mexican government has awarded three concessions totaling MXP8.22bn to complete the final 74km section of a highway connecting Mazatlan and Durango. A consortium led by Mexican construction firm Omega won the biggest piece, a MXP3.97bn contract for a 46km stretch that is to include 26 tunnels and 14 bridges. An 18km stretch with 16 tunnels and 12 bridges went to a consortium made up of Spain’s FCC and Mexico’s La Peninsular Compania Constructora for MXP2.19bn. Mexico’s Tradeco got the last piece, a MXP2.06bn award to build 10km. The contracts will be financed through the Fonadin national infrastructure fund, and work must be completed in 3.5 years. The government claims the Mazatlan-Durango highway is the largest public road project in the history of Mexico.

Food producer Sigma Alimentos has priced MXP1.5bn in fixed-rate 2018 bonds denominated in pesos and the UDI inflation-linked unit. A MXP1bn peso tranche priced at 10.25%, representing a spread of 117bp wide to comparable MBonos. Pricing came within the initial guidance of 115bp-120bp. A MXP500m-equivelant UDI piece priced at 5.32%, representing a spread of 110bp wide to MBonos, within expectations of 110bp-115bp. The book size reached MXP2.1bn, according to a banker managing the sale. With the proceeds, Sigma will repay MXP1bn in 8.8% local bonds coming due, and additional bank debt. Banamex managed the transaction, rated AA+ on a national scale.

S&P has placed Su Casita on credit watch positive following the news that Spanish Bank Caja Madrid is set to acquire 100% of the Mexican mortgage lender. Su Casita’s 70% compounded average growth over the last six years has put pressure on its capitalization, says S&P analyst Francisco Suarez. “Reducing funding costs is crucial for the overall competitiveness of the entity,” he says. “Any additional capital would be a help.” However, no rating action will be made until the transaction is approved and the two sides communicate the financial and strategic implications of the deal. Su Casita is rated BB, and A on a Mexican national scale.

Mexico’s BBVA Bancomer plans to sell up to MXP5bn in 2018 subordinated bonds as soon as Thursday, according to regulatory documents. The bonds are rated AAA on a national scale and will pay interest over 28-day TIIE. Proceeds will be used to strengthen the Tier 2 capital base. BBVA has has placed almost MXP20bn of its own bonds RMBS this year, making it the largest issuer in Mexico’s domestic market, according to Dealogic. This will be its first MXP Tier-2 issue this year. BBVA’s own capital markets unit will lead the transaction.