Brokerage firm Grupo Bursatil Mexicano (GBM) plans to issue a domestic bond of up to MXP1.5bn ($114m) October 22, according to a regulatory filing. Proceeds from the 4-year floater will be used to replace existing debt and for working capital purposes. The issuance is rated AA on a national scale and led by BBVA Bancomer, HSBC and GBM. In May, the issuer priced a MXP650m 1.2-year floating-rate bonds paying TIIE+25bp.
Category: Regions
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BTG Approved for Mexico
BTG Pactual has been granted authorization to operate as a broker-dealer in Mexico, it says. Javier Artigas has been head of the Brazilian bank’s Mexican operation since last year.
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Sicrea Reopens ABS
Sistema de Credito Automotriz (Sicrea) has reopend its 2017 domestic bonds backed by trade receivables, to raise MXP450m ($34m), according to people familiar with the transaction. The issuer reopened the bond at 100.30, to offer TIIE+150bp. In its initial deal, it priced MXP1bn of the 2017 bonds at TIIE+160bp, and returned for a MXP300m retap in October last year at TIIE+157bp. Proceeds from the new retap are destined for general corporate purposes. Actinver managed the sale, rated AAA on a national scale. Sicrea is an association of Nissan dealers which provides credit for auto loans.
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External Crises Sharpen Domestic Focus: Cardenas
The QE stimulus unwind and debt ceiling talks in the US mean emerging economies can’t count on a favorable external environment, Colombian Finance Minister Mauricio Cardenas tells LatinFinance, particularly against a backdrop of lower commodity prices and reduced FDI potential. “I am fully convinced that we need to prioritize a more ambitious program of domestic investment to offset a weaker external environment. If we want to grow 4%-5% per year, we need to focus on the domestic side,” Cardenas says. The need to boost his country’s economic self-reliance was clear, as policy talks at the IMF’s annual gathering were overshadowed by the threat of a US sovereign default. “It would be naive to ask for the US authorities to incorporate reactions of other countries [into their decisions]. At the end of the day, decisions will be made with other priorities in mind,” he says. Foremost on the domestic agenda is a redoubling of efforts to boost investment in critical infrastructure. Cardenas says Colombia’s potential growth rate could hit 6.0% if talks with FARC rebels prove successful and lead to an economic “peace dividend,” and if targeted infrastructure investments proceed to plan. Authorities aim to use proceeds from the sale of the government’s 57.7% stake in generator Isagen to stimulate private financing for the $25bn in “fourth generation” road concessions it is in the process of awarding. Colombia expects to receive more than $3bn for the stake, with proceeds going to the newly-created Fondo para el Desarrollo Nacional (FDN), which can offer subordinated debt, guarantees and other credit enhancements. The minister said the goal is an entity in the mold of Mexico’s Fonadin, rather than Brazil’s BNDES. “The strategy to deal with the external circumstances is to mobilize funds from one sector to another,” he says.
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Cabei Targets MXP, CHF in November
The Central American Bank for Economic Integration (Cabei) is looking to sell bonds in Mexican pesos and Swiss francs in November, Jorge Cortes, acting head of capital markets, tells LatinFinance. The price sensitive issuer finds that the two currencies provide the best arbitrage opportunities. A/A2/A rated Cabei is targeting $300m-equivalent in the Swiss market at 3-7 years, and is looking at $150m-equivalent in Mexico’s domestic market through 3 or 4-year bonds. Both would be consistent with the bank’s long-term strategy to diversify and grow its investor base. Cabei has $470m left to issue by year-end and is also preparing to issue a $50m 15-year bond through a private placement in the dollar market before the end of the year. The multilateral plans to mandate in approximately two weeks, Cortes says. As of June 2013, approximately 28% of funding has come from the dollar markets, 19% from the Mexican bond market and 11% from the CHF market. Cabei in March raised CNH500m ($80m) in its first-ever offshore renminbi bond. The 2016 Dim Sum bond came at a 3.20% yield. Looking farther ahead, Cabei is considering issuance in a range of other international markets, including Australian dollars.
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Artha Brings out CCD Follow-up
Artha Capital has made the initial closing of a new certificado de capital de desarrollo (CCD) fund, according to regulatory documents, raising MXP754m ($58m). The Mexican investment firm has a MXP1.56bn target for the 2023 fund that it plans to reach through capital calls. The fund, Artha’s second CCD, will target investment in commercial, office, industrial and mixed-use real estate. The fund will feature the return structure common to CCDs and to private equity – investors receive their investment plus a 9% preferred return, with additional proceeds divided 80%-20% between investors and the manager. BBVA Bancomer and Banorte-Ixe managed the transaction. Artha’s original CCD raised MXP2.57bn in 2010. It was founded in 2009 by ex-banker Carlos Gutierrez and real estate executive German Ahumada.
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Carstens Warns on US Debt Threat to LatAm
Latin America’s slowing economies could face “very severe” repercussions if US lawmakers fail to raise the government’s debt ceiling this week, Mexico’s central bank governor Agustin Carstens tells LatinFinance. “If there is a major breakdown [in US debt ceiling talks] and this is a prolonged issue, the consequences could be very serious,” Carstens says. His comments come as congressional leaders in Washington failed this weekend to break an impasse to avoid a possible sovereign default when the borrowing cap expires on October 17. Carstens says that Mexico’s economy – which has disappointed following a sharp slowdown in growth this year – could face severe headwinds if a deal is reached in Washington that chokes off US growth as a result of sharp spending cuts. In the case of a default, “the shock would be very strong,” he adds. “The main point is how the US government reacts. If they decide to cut government spending, they could go into recession. If there is a default then the financial sector and capital account would be the transmission mechanism [to the Mexico’s economy],” he says. Mexico’s public credit director Alejandro Diaz de Leon tells LatinFinance the threat of a US default is “like having an explosive device that could be deactivated if both parties agree.” He adds that while he expected a default to be avoided, uncertainty over US economic policy means that “volatility will be with us for quite some time.” Carstens says that Mexico’s economy – which faltered this year amid weak US demand for domestic exports and a slump in construction – is nevertheless poised for a rebound. If US leaders strike a longer-term budget deal and avoid breaching the debt ceiling, Carstens says a pick up in US growth to at least 2.5% would “give an additional push” to Mexico’s economy. He expects GDP to expand by up to 2.0% in 2013, compared to 3.8% last year. Carstens refused to be drawn on whether the central bank would reduce interest rates further to boost growth. “I
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Maxcom Exits Bankruptcy
Maxcom has completed its Chapter 11 bankruptcy proceedings in the United States, it says. The exit follows a sale of the Mexican telecom to a private equity firm and subsequent capitalization process that resulted in a reduction of debt and injection of $45m. A group of investors led by Mexican private equity firm Ventura Capital Privado acquired 44.7% of the Maxcom shares through a public offer last month. Lazard has been advising Maxcom, a provider of business and residential phone along with pay TV and other services.
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Paraguay Focused on Bond Return
With a new finance ministry team in place, Paraguay continues to see a follow-up to its debut bond as a necessary part of its broader engagement with the international financial community. “We are considering the possibility to go back to the market,” Finance Minister German Rojas tells LatinFinance. Borrowing should include a new bond, as well as multilateral debt to raise funds for infrastructure and fighting poverty. Consistent sources of external funding are a key part of the ministry’s efforts to drive strong yet consistent GDP growth in the years ahead, Rojas says. “The international scenario is giving us signals as to how Paraguay can approach the international market,” vice minister Daniel Correa tells LatinFinance. He says The timing is “probably next year.” Officials from the previous administration said in May the sovereign was contemplating a GDN placement, and this remains a goal, Correa says. “We want to build a curve for local currency,” he says. The choice between dollars and a GDN, though, ultimately depends on the markets, and the ability of a GDN – a more difficult sell since the June market shakeup – to offer a benchmark size. The government is working with Citi as an advisor. A new international transaction would follow the Ba3/BB minus/BB minus issuer’s debut in January, raising $500m in 2023 bonds at a 4.625% yield via Bank of America Merrill Lynch and Citi.
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Honduras Eyes December Debt Sale
Honduras sees a path to issue the $250m in bonds remaining under its budget this year after November elections, its finance minister says. “Rates will keep going up, that is why we want to issue,” Wilfredo Cerrato tells LatinFinance. He notes that investors have wanted to see the resolution of a $205m US lawsuit, which has now been settled in the sovereign’s favor. A transaction would need to follow November presidential elections, and if conditions permit, Honduras would likely return with a new $250m 5-year benchmark in the first week of December. Proceeds would be used to cover short-term indebtedness. The sovereign is optimistic for pricing below the 7.50% it got in its debut $500m bond transaction in March, which widened out from earlier, 7.00%-area price talk. The B2/B+ issuer overcame the disclosure of the lawsuit – filed against a government-owned forestry entity – during marketing, and the loss of a bookrunner, to end up with more than $1.75bn demand. However, the legal issue led to wider pricing than the sovereign had wanted, Cerrato says. S&P lowered Honduras’ credit rating to B from B+ in August as a rising debt has made the government’s finances more vulnerable to external shocks. Cerrato expects a deficit of 4.7% of GDP in 2014, after a 6% deficit this year.