Category: Mexico

Mexican home construction company Urbi Desarrollos Urbanos has completed a $280m capital increase, selling 83.5m shares at MXP37 pesos a share. Urbi plans to use the proceeds from the share offering for strategic investments, including large development projects. BBVA Bancomer, UBS, Vector Casa de Bolsa, Banamex, Banorte, Santander, Ixe and Scotia Inverlat managed the offering.

Mexico’s Banco Compartamos expects losses of up to MXP4m from the floods in Tabasco and Chiapas. It anticipates an increase in the NPL ratio, but not above 20bp of the total loan portfolio. Compartamos has service offices in the affected areas of the state of Tabasco. The loan portfolio there represents 5% of the total. Some 31% of the loan portfolio in the state were affected to some degree, equivalent to 1.4% of Compartamos’ total loan portfolio. “Compartamos will not suspend the granting of loans in the region,” says the bank.

Moody’s has raised its outlook on Ford Credit de Mexico’s national scale debt ratings to stable from negative. At the same time, the Baa1.mx long-term and MX-2 and short-term debt ratings were affirmed. The change follows Moody’s decision to change Ford Motor Credit Company LLC’s rating outlook to stable from negative. Ford Credit de Mexico’s debt ratings are based on irrevocable and unconditional guarantees provided by Ford Credit.

Mexico’s Hipotecaria Su Casita has become the latest victim of whippy debt markets. The mortgage lender terminated its tender offer for the $150m in outstanding 8.50% 2016 senior notes this week, citing adverse market conditions. A peso offering to fund the buyback was said to have been in the works. Merrill Lynch was running the buyback. The aborted liability management coincides with a brutal November for high yield cross border markets that saw the death of Grupo Unialco’s $150m 7-10-year, a $275m 10-year from Mexico’s Sanluis, a $150m 2010 from Brazil’s Banco Cruzeiro, a $220m 2014 from Argentina’s Banco Macro and Cap Cana’s $500m 2017 amortizer.

Javier Segovia, the longstanding director general of Mexico’s Grupo TMM, is stepping down December 1 to pursue outside interests. José Serrano, chairman of Grupo TMM, will serve as president until a replacement is appointed. Segovia has been at TMM 12 years, during which it became a leading maritime and logistics company. “We anticipate incremental profit opportunities will occur throughout the fourth quarter that will set the stage for a very profitable 2008,” says Serrano.

Milano is scheduled to hold a bank meeting today in Mexico and tomorrow in New York to syndicate out the portion of its $190m loan that hasn’t been taken on by bookrunners Citi, Santander and ING. The Advent-owned retailer is looking to raise as much of the transaction as it can in pesos. It will offer 275bp over TIIE or Libor out of the box for a $170m equivalent 7-year term loan. Pricing is on a leverage grid, which at 4x leverage pays 325bp over TIIE or Libor, and at below 2x, 100bp over. Out of the box, the leverage ratio is 3.0x-3.5x. Pricing on the $20m revolver is 150bp at the highest ratio and 75bp at the lowest. Citi is lead arranger and bookrunner. Today’s meeting is at the W Hotel at 9.00am in Mexico and Friday’s meeting will be held at the New York Palace Hotel starting at 8.30am.

Cemex Inc, the US subsidiary of the Mexican cement leader is in negotiations with Ready Mix USA, a private ready-mix concrete company with operations in the Southeastern United States, to expand the scope of their ready-mix joint venture. This includes asset sales, with proceeds earmarked to reduce the Mexican firm’s debt. Cemex intends to contribute assets valued at approximately $150m to the jv and intends to sell additional assets to the jv for approximately $227m in cash. As part of the transaction, Ready Mix intends to make a $150m cash contribution to the jv. Ready Mix will manage all the newly acquired assets. Following the transaction, the joint venture will continue to be owned 50.01% by Ready Mix and 49.99% by Cemex. The transaction is subject to the signing of a definitive agreement and obtaining the required regulatory approvals. The 2006 Ebitda for the operations involved was approximately $47m.

Continuing a longstanding rotation from dollars to domestic debt, the Mexican government has retired another $88.6m in external 2011s, 2012s, 2013s and 2015s through a warrant exercise. Holders of XWDB07 debt exchange warrants were delivered MXP514.2m in M2014 bonds and MXP382.1m in M2024 bonds. “The exercise of this series of warrants improves the internal-to-external debt ratio, and reduces the vulnerability of public finances to adverse external shocks,” says Mexico’s finance ministry. The government reiterated its commitment to strengthening the structure of the public debt portfolio. “As long as macroeconomic and financial conditions permit, the federal government will continue to carry out the necessary operations to insure the most favorable cost conditions for public debt in the medium and long-term, subject to a prudent level of risk,” says the ministry. The XWDB07 warrants were one of three series issued March 15. Total federal debt was unchanged by the deal.

UBS Pactual took a contrarian view on LatAm equities in a Monday research report by picking Mexican equities as the top pick for the region in 2008. That country’s market has underperformed the rest of the region and today offers the best relative value, say the shop’s analysts. “While earnings have been on the soft side and US economy is a risk, we believe that growth should pick up in 2008, making today’s problems a contrarian entry point,” according to the report. High oil prices, good employment growth and credit cycle dynamics should keep the Mexican economy resilient to a US slow-down. Mexico replaces Brazil as UBS Pactual’s top pick, though analysts remain constructive on Brazil in the medium term. Last week, Mexico dedicated equity funds suffered a net outflow of 7.48% of assets under management, based on the view that the country’s economy would be derailed by a US slowdown, according to EPFR.

Mexico’s Rep Uno has extended its tender offer for securities at its subsidiaries, thereby delaying an associated bond issue. Holders of 8% of 2010 Sanluis Co-Inter notes and 8.875% of 2008 Rep Uno notes and Sanluis commercial paper now have until December 7 to receive $1,353 per $1,000. The extra time is being given to allow for better market conditions for the sale of some $275m in 2017 bonds funding the tender offer, according to bankers familiar with the transaction. Sanluis Rassini, the subsidiary selling the debt, went out with 11.5% guidance October 24. Morgan Stanley is managing the sale and serving as dealer manager on the tender.