Category: Mexico

The Mexican state of Sonora has closed a MXP4.6bn 30-year peso bridge loan to support its Plan Sonora Proyecto infrastructure plan. The AA (Fitch) facility arranged by Banorte and Project Finance Associates (PFA) pays 100bp over 28-day TIIE, PFA executive director Mauricio Gutierrez de Gregory tells LatinFinance. It is backed by tax receipts. By the end of the year, the facility is expected to be replaced with a takeout of up to MXP10bn in 30-year bonds. The jumbo deal, which will sold to local pension funds and insurance companies, will also refinance $520m equivalent in state debt. The fixed rate bond will issued by the end of 2008 through PFA and Banorte, Gutierrez says. The plan is to have UDI and MXP tranches, and PFA is looking for a monoline wrap.

A loan syndication for Mexican homebuilder Javer is heard dragging its feet, though whether because of deal-specific factors, or general market malaise is unclear. The company launched the $160m 5-year amortizer with two MLAs – ABN AMRO and Inbursa – already confirmed. Santander signed on soon after as a lead arranger, but since then, the deal, which pays Libor plus 350bp, has not made further progress. Credit Suisse is leading.

US-based Parker Hannifin, a seals producer, has acquired the remaining stake in its joint venture, Parker Seal de Mexico. Parker held a 49% stake in the $8.3m revenue company prior to the acquisition from multiple joint venture partners. Terms were not disclosed. “This is part of our long term strategy to serve customers who have operations in Mexico,” says Heinz Droxner, president of the Parker Seal Group. Parker manufactures seals by various processes in a broad range of fluorocarbon, PTFE and metal materials for use in liquid, gas, automotive, food processing, medical and electromagnetic shielding applications. It boasts annual sales exceeding $10bn.

The spinoff of Telmex International from the Mexican telecom giant is on the way to market soon, say bankers. The plan, announced late last year, involves dividing Telmex into two separate companies by spinning off all LatAm businesses and the Mexican yellow pages business, which already has an international presence, to a new holding company. The deal is aimed at boosting efficiency and allowing each unit to operate autonomously for administrative, commercial and financial purposes. It also intends to improve Telmex in Mexico by allowing it to “distinguish operations in the middle and high-revenue markets, in which there is competition, from the low-revenue and rural markets, in which there is no competition,” says the telecom. The new holding company will be listed in Mexico and the US. The move should help free Telmex from pressure that recent government anti-trust actions put on the company’s stock, say analysts. Shareholders approved the split in December.

Minera Autlan, the Mexican mining company, and parent company Grupo Ferrominero (GFM), say they have hired Lehman Brothers to “explore strategic options for GFM and its subsidiaries, among them its Minera Autlan.” diverse holdings. The GFM group includes CEM, GFM Resources, GFM Electronics and Parras.

America Movil and Digicel have bought licenses to operate GSM mobile networks in Panama. Jamaica-based Digicel says it paid $86m for its license, while Mexico-based America Movil says only that it has secured a 20-year concession for 30MHz in the 1900MHz radio frequency band. In Central America, Digicel already operates in El Salvador and has plans to launch in Honduras later this year. “Significant investment in Panama is planned to build a world-class network and operation that is set to stimulate growth in the mobile market by increasing mobile penetration within the next five years from approximately 60% to 90%,” says Digicel. The two incumbent Panama operators are Movistar (Telefonica) and Cable & Wireless.

EMP Latin America, a Washington DC-based private equity fund, has sold a final stake in Mexican telecom Axtel. The roughly 2.5% stake was the last of an original 15% equity investment made in 1997, when Axtel was a startup. EMP got rid of half the original stake in Axtel’s 2005 IPO, and followed in 2007 by another 5% divestiture, the firm says. The final portion was sold for roughly $53m, according to people familiar with the deal. EMP is heard in the market raising a new vehicle for LatAm, though size and timing of a final close are still forthcoming.

America Movil, the Mexico-based LatAm telecom giant, has agreed to pay $480m to the Ecuadorean government to renew its local mobile phone concession for 15 years, according to Ecuador’s telecom regulator Senatel. The move comes a few days after Senatel had rejected an initial $307m offer and announced that the operator was leaving the country in August. The government and the mobile operator expect to close the transaction Wednesday. America Movil, which operates in Ecuador through its subsidiary Porta, controls almost 70% of the domestic market.

Mexican brewer and bottler Femsa is considering the issue MXP1.5bn in new local bonds. Femsa is heard hammering out the details and choosing banks this week with an eye on coming to market this month. S&P has given the transaction, still in the planning stages, a mxAAA rating. It raised MXP6bn in 2017 UDI-denominated and 2013 floating-rate peso notes in December via HSBC, Santander, BBVA and Scotia.

S&P has put the B+ rating of Mexico’s Corporacion Durango on CreditWatch with negative implications and warns of significant pending downgrades amid deteriorating debt ratios. “They have too much debt, and are getting caught by higher costs,” says an analyst at a major Wall Street shop, adding that the 2017 was trading around 58-60. “Right now their Ebitda is less than their interest expense,” the analyst adds. The S&P watch follows last week’s demotion from Fitch, and S&P predicts that key financial ratios will continue to exceed assumptions based on the current rating. “We will need to reevaluate the company’s financial and operational strategies to resolve the CreditWatch. Any downward rating action would not be limited to one notch,” says S&P analyst Juan Pablo Becerra. The Mexican paper and packaging firm’s total debt to Ebitda ratio hit 6.8x March 31, versus an S&P forecast of around 3.8x by year-end 2008. Negatives include high debt, a moderately aggressive financial policy, and natural risk associated with the paper industry’s cyclicality. This is partially offset by Durango’s leading position in the containerboard and packaging industries, as well as vertical integration in Mexico. Fitch cut Durango to B minus from B and its 2017 notes B/RR3 from B+/RR3, implying a 51%-70% recovery in the event of default. The ratings remain on rating watch negative. The firm has $14m in short-term debt and $524m in long-term debt. Only last year, the company was planning to buy back bonds in 2008 to spruce up the balance sheet.