Category: Mexico

The lead banks on ICA’s $1bn 4.5-year loan to fund construction of the 750MW La Yesca hydroelectric project in Mexico are targeting 6-10 banks in a retail syndication expected to wrap up in January. On offer are $50m lead arranger, $30m arranger and $20m manager spots, with DnB Nor already in. Pricing is heard to be in the range of 50bp-60bp, say bankers away from the deal. WestLB is bookrunner on the deal, with NordLB, BBVA, Citi, Santander, Scotia and Natixis as MLAs.

Mexico City’s government is expected to launch the sale of MXP3.64bn in local bonds today. The offering via Deutsche Bank and JPMorgan consists of a 20-year fixed and a 10-year floating-rate tranche. Sigma Alimentos is also preparing an issue of up to MXP2bn in 2014 fixed and 2012 floating-rate notes, through Bank of America. And Wednesday, Geo filed a MXP2bn shelf to issue UDI or peso bonds via Banorte.

Latin American indices closed lower Tuesday across the board as the market reacted poorly to a stingy 25bp rate cut from the Fed. Mexico’s Bolsa led the losses with a 2.7% drop. The Ibovespa was down 1.4%, Peru’s IGBVL dropped 0.4%, Argentina was down 0.6% and Venezuela was closed 2.2% lower, according to Economatica. Colombia was the only exception, closing up 1.9%. “The decision was not a surprise. However, markets are a little disappointed, since they considered the action as insufficient to reduce financial costs and relief pressures in the economy,” says Moody’s.

Latin American indices closed lower Tuesday across the board as the market reacted poorly to a stingy 25bp rate cut from the Fed. Mexico’s Bolsa led the losses with a 2.7% drop. The Ibovespa was down 1.4%, Peru’s IGBVL dropped 0.4%, Argentina was down 0.6% and Venezuela was closed 2.2% lower, according to Economatica. Colombia was the only exception, closing up 1.9%. “The decision was not a surprise. However, markets are a little disappointed, since they considered the action as insufficient to reduce financial costs and relief pressures in the economy,” says Moody’s.

Mexican retailer Liverpool is expected to sell MXP3bn-MXP4bn in local 2014 FRNs today via HSBC and Citi. And a MXP3.6bn offering from the Mexico City government is being readied for Wednesday via JPMorgan and Deutsche Bank. The DF offer will consist of 20-year fixed and 10-year floating rate notes, and is rated AAA(mex) by S&P. The remainder of notes authorized under a MXP4.5bn program is expected to be sold in an offering next week.

Mexican retailer Milano is close to wrapping up a $190m leveraged loan, and gunning for a close by year-end, say bankers close to the transaction. The book is heard to be $20m short of being fully covered, with verbal agreements in place to cover the difference. So far, Banamex, ING, Santander, GE Capital, Unicredit and Banorte have signed on to the dual currency deal, composed of a $170m 7-year term loan a $20m revolver. The term loan pays $275bp over Libor or TIIE, and the pricing moves on a leverage grid which, at 4x pays 325bp over, and below 2x pays 100bp. The revolver pays 150bp at the highest ratio and 75bp at the lowest. Citi is the lead.

Mexico Friday became the latest in a slew of Central Banks to hold monetary policy. Banxico stuck to a 7.50% tasa de fondeo, with a neutral bias. It followed last week’s decisions to stay put by Brazil (11.25%), Peru (5%) and Uruguay (7.25%). Governments throughout the region are under pressure to tame inflation but not stifle growth.

Mexican brewer Femsa priced Wednesday MXP6bn in local bonds in two tranches. A MXP2.5bn 2017 UDI-denominated tranche priced at 4.21%, via HSBC and Santander. A MXP3.5bn 2013 floater priced at TIIE minus 5bp, via BBVA and Scotia. Total demand, mainly from Mexican funds and insurance companies, exceeded MXP20bn, according to bankers on the AAA rated transaction. Proceeds refinance debt. More local bonds are on the way before the end of the year, as retailer Liverpool is preparing to sell MXP3bn-MXP4bn in 2014 FRNs Tuesday via HSBC and Citi. Sigma Alimientos is also is expected to price next week up to MXP2bn in 2014 fixed and 2012 floating-rate notes via Bank of America. BBVA is heard to be preparing to sell MXN2.6bn in MBS before year-end.

An increase in public works spending and local institutional investor demand should bring Mexico about MXP160bn in new corporate debt in 2008, an increase of 15%, according to a report by BBVA. The bank expects that MXP140bn will have been issued by the end of 2007, after about MXP11bn is issued in December. President Calderon has made public works spending a priority, and the bank estimates that the government will finance 40% of a multi-year $235bn spending plan, with most of the rest coming from syndicated loans or local bonds. More banks are expected to securitize mortgage portfolios, and the approximately MXP36bn in debt due next year also implies greater activity. BBVA recommends Pemex 2023, 2027 and perpetuals, along with America Movil’s 2035 and Televisa’s 2032. On the high-yield side, the bank likes Axtel 2013s and the 2017 from homebuilder Demet.

Mexican retailer Soriana has agreed to acquire the Mexican and US stores of Grupo Gigante for $1.35bn, plus inventories and rent on locales. A sale to one of several large retailers had been rumored since early November, when Gigante announced it had hired IXE, Citi and Deloitte to explore options. The transaction comprises Gigante’s 199 Gigante, Bodega Gigante and Super G stores in Mexico and seven stores in Los Angeles. It excludes Gigante’s restaurants and various joint-ventures with retailers such as Radio Shack and Office Depot. Soriana plans to take over and rebrand the stores within four to five months, and invest $600m renovating them over five years.