Category: Mexico

The energy reform proposal sent to the Mexican congress by president Felipe Calderon is an important first step to improving the country’s oil sector, Fitch’s senior director of foreign ratings Shelly Shetty tells LatinFinance. “We’ve seen a decline in production levels in Mexico and clearly a reform is needed to maintain and boost both investment and production levels in the oil sector,” she says. But this is not an optimal reform, Shetty says, since it does not permit full scale private sector participation. “However, it does allow for greater financial and budgetary flexibility for Pemex, and allows for enhanced corporate governance which should help the company to increase investment in the sector,” the analyst states. If the reform were to pass, it would have a pretty important symbolic importance, given the continuous opposition in Mexico to allowing any form of private participation in the oil sector. “One has to monitor the political debate,” Shetty says. Impact on Pemex and sovereign bonds will depend on how far the proposal advances in congress, says Alfredo Coutino, senior economist for LatAm at Moody’s Economy.com. “If there is a lot of resistance, we will not see a positive answer in the bonds and in the ratings of the country and the company,” Coutino says. However, if the reform is approved even with modifications, bonds will receive a positive boost. “In the medium to long term the answer will be positive for the bonds,” he adds.

Metrofinanciera is preparing to sell MXP2.5bn in 6-year bonds backed by construction bridge loans this month. The floating-rate offering denominated in UDIs or pesos will include an A tranche and a subordinated B tranche, the proportions of which have not been determined. Ixe is managing the sale.

Colombia’s finance ministry is considering starting a national infrastructure fund similar to Mexico’s Fonadin, finance minister Oscar Ivan Zuluaga tells LatinFinance. Encouraged by the recent appearance of private equity in the country, he explains, the government would like to start a vehicle where public and private money would join to fund infrastructure projects. Colombia is in discussions with banks about possible advisory roles in such a fund. Zuluaga declined to comment on the size of the fund, or a timetable for its creation. The government is planning a roadshow in the coming months to promote both its sovereign credit and investment in its infrastructure projects. Public credit director Viviana Lara tells LatinFinance that the finance ministry is not planning to issue any new debt at this time, as its funding needs are met. It may, in the second half of the year, begin considering COP debt options, with the goal of getting its peso debt to 60% of its total debt from the present level, around 40%.

Federico Patino will run Mexico’s new MXP270bn national infrastructure fund, Fonadin, which should be up and running within weeks. The fund is part of Banobras and Patino, formerly at Nafinsa, will report to Alonso Garcia Tames, Mexico’s public credit head Gerardo Rodriguez tells LatinFinance. It will start with MXP40bn from last year’s FARAC toll road auction and channel approximately MXP270bn into infrastructure projects over the next five years. It will invest through guarantees, subordinated debt, risk capital and other vehicles that support loss-making projects. Mexico sees infrastructure investment as part of a counter-cyclical economic policy and an important measure to counter the negative impact of a US slowdown this year.

Mexico has no plans to issue debt in the overseas markets to break the sovereign logjam, head of public credit Gerardo Rodriguez tells LatinFinance. “We very have a very good dialogue with all the banks, we try to get them involved in our strategy,” says Rodriguez, who was at IDB meetings in Miami this weekend. “We are in a relatively comfortable position of not needing funds,” says the official. “Perhaps what makes sense, with all this uncertainty in this environment, would be to wait and see how markets go back to a more normal dynamic,” he adds. State oil giant Pemex plans to raise $5bn in 2008, including $2bn from local and international capital markets. “Most of that can be done in the local markets,” says Rodriguez. “They are taking a look as usual at external potential funding activities but markets would need to go back to more normal dynamics.”

Mexico expects the third highway concession package from its MXP270bn Fonadin national infrastructure fund to be bid by the end of the year, head of public credit Gerardo Rodriguez tells LatinFinance. Mexico will have further details out in a few months. Materials for the second, so-called “Pacific Package” were distributed in February. It incorporates some existing roads – Guadalajara-Tepic, Mazatlan-Culiacan and Aeropuerto Los Cabos-San Jose del Cabo – and a few others to develop the Mazatlan bypass, Culiacan bypass, Guadalajara southern bypass, Compostela-Puerto Vallarta and San Jose del Cabo-Cabo San Lucas. The third concession is also expected to mix greenfield and brownfield projects. The first package from Mexico’s Fideicomiso de Apoyo para el Rescate de Autopistas Concesionadas (FARAC) trust was sold in 2007 to Empresas ICA and Goldman Sachs Infrastructure Partners. The MXP37.1bn loan package secured was the first such international financing done in pesos, and the biggest local currency syndication the LatAm project market has ever seen. Lenders holding big peso tickets nervously await a swift takeout, but Rodriguez says the project will want to accumulate a track record before coming back to market.

In an April 6 brief entitled, “Mexico’s TRIG Readies $1bn PF,” the bank on Peru LNG’s project finance was incorrectly stated. The leads are BBVA and Socgen.

Credit Suisse, Mexico and Cleary Gottlieb were among the big winners at last night’s LatinFinance 20th Anniversary Gala Dinner & Awards Ceremony in Miami. Following is a list of winners presented at the event.

A $1bn project finance package for Tren Interurbano de Guanajuato (TRIG), a light railway system in the eponymous Mexican state is heard forthcoming in the next six weeks, say bankers close to the process. The 10-year financing, being led by WestLB, is a refinancing of existing project debt. A substantial portion of the new debt will also come via a subordinated tranche, says the banker. The new package is to be rated and will include a guarantee by German ECA Hermes. ICA and Siemens’ Mexico arm are the two engineering shops working on the project. Pricing and tranche sizes are still forthcoming. The deal is among a handful of large projects in the works across the region, and one of several deals being led by WestLB. Others include Peru LNG, Transalta, and Buenaventura Port.

A $1bn project finance package for Tren Interurbano de Guanajuato (TRIG), a light railway system in the eponymous Mexican state is heard forthcoming in the next six weeks, say bankers close to the process. The 10-year financing, being led by WestLB, is a refinancing of existing project debt. A substantial portion of the new debt will also come via a subordinated tranche, says the banker. The new package is to be rated and will include a guarantee by German ECA Hermes. ICA and Siemens’ Mexico arm are the two engineering shops working on the project. Pricing and tranche sizes are still forthcoming. The deal is among a handful of large projects in the works across the region, and one of several deals being led by WestLB. Others include Peru LNG, Transalta, and Buenaventura Port.