Moody’s has downgraded a Hipotecaria Su Casita construction loan securitization to B3/Ba3.mx from B1/Baa1.mx, and withdrawn the B1 underlying rating. The move comes after the Ambac financial guarantee on the senior certificates was canceled. The downgrade reflects the credit deterioration of the portfolio, says Moody’s. The ratings action also reflects concerns about the mortgage provider’s stability as a servicer of debt, as a result of the recent downgrade of the company’s issuer rating.
Category: Regions
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Venezuela Cancels Crystallex Contract
Canadian miner Crystallex International says that the Venezuelan government has cancelled its mine operating contract (MOC) for the Las Cristinas gold project. The government cites Crystallex’s lack of progress on Las Cristinas for more than a year and “for reasons of opportunity and convenience” as reason for the termination. However, Crystallex says it has complied with all the obligations stated in the MOC. It also says that in June 2007, the government confirmed approval of the project’s environmental impact study, the posting of the construction guarantee bond and the payment of the environmental disturbance taxes. However, the local environmental ministry denied the request for the environmental permit in April 2008. Crystallex signed the MOC in September 2002. The contract granted Crystallex exclusive rights to develop and exploit the gold deposits on the Las Cristinas property. The miner raised CAD35m in June to finance the development of the project. Crystallex says it is considering all steps necessary to protect its investment, including filing an international arbitration claim. Las Cristinas was Crystallex’s only asset.
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Costa Rica Eyes Dollar Issue
Costa Rica plans to seek approval for an international bond this year, according to the H1 2011 borrowing strategy announced by its treasury. The decision is not a surprise given the market’s expectations for a budget shortfall. Nomura expects a 6-year dollar bond for $250m. “Even when authorities plan on requesting the needed authorization to Congress as soon as next month, its first stop is the finance committee, which right now is exclusively focused on the discussion of the fiscal reform plan,” Nomura says, spotting a Q4 deal. It forecasts a -0.6% fiscal balance for 2011. Facing CRC300bn ($600m) in maturities in the first half of 2012, the sovereign also plans to issue a 10-year local bond to extend its local currency curve. Baa3/BB Costa Rica’s last cross-border bond was a $250m 10-year in 2004, according to Dealogic.
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Debut Mexico REIT Fails to Launch
What was to be Mexico’s first REIT has been postponed, according to bankers managing the transaction. The Fibra Uno deal brought by Grupo E, expected to raise around MXP5bn, failed to generate demand within its target MXP21-MXP23 range, according to sources familiar with the deal. They add that the book was well bid at MXP18. The 230m certificate deal would have raised MXP4.1bn at that price, assuming the maximum number of shares was sold. It started marketing last month and was targeting a February 3 sale. Mexico has been waiting years for its first REIT. Such a deal, known as a fibra locally, is possible following regulatory changes last year. Fibra Uno was to consist of 12 industrial, commercial, office, and mixed-use properties located throughout Mexico and totaling 484,000m2. The commercial properties had an average occupancy rate of around 90%, but the industrial properties’ rates were lower, notes a banker away from the deal. He also says that a fibra with more institutional backers might have received more interest, versus one backed by family investors. Grupo E consists of 60-70 owners, led by the El-Mann and Attie families. Santander was lead coordinator in Mexico, with BAML and UBS as global coordinators and Mexican bookrunners and Protego as a Mexican bookrunner. Proceeds were to have been used to fund the acquisition of 5 additional commercial and mixed-use properties totaling 189,000m2. About 50% of the deal was aimed at international investors, who were heard keenly watching it. “There is a great deal of wealth tied up in Mexican buildings and property,” says a London-based EM equities portfolio manager who had planned to participate. He notes that he was hoping the debut would inspire a string of similar deals, creating a potentially strong asset class. The suspension of Grupo E leaves the asset class with an uncertain fate. A second fibra, from Construtora Planigrupo was filed recently, targeting MXP2.75bn.
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Maxcom Heard Abandoning Sale
Maxcom has taken itself off the market, according to Mexico-based bankers familiar with the situation. The Mexican telecom provider had retained Barclays to sell itself, but suffered from a lack of interested buyers, according to bankers in Mexico and New York. Maxcom released disappointing earnings results for Q3 2010, with an MXP80m loss (up from an MXP148m loss for the same period in 2009), and will likely seek to improve its numbers before attempting another sale. Maxcom says it is not working with Barclays, but declines to comment on whether it had been working with the bank previously. Udi Margulies, MD of investment banking at Barclays, declines to comment.
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Sura Acquiring Asesuisa
Colombian insurance conglomerate Suramericana is on track to acquire El Salvador-based insurance company Asesuisa from Bancolombia, a company spokeswoman confirms. The spokeswoman confirms estimates by Colombian equity analysts that the deal will cost around $100m. She expects the deal to be announced in the next few weeks. Suramericana announced January 31 that it was buying Dominican Republic-based property and casualty insurer Proseguros for $22.5m from NY-based PE shop Palmfund.
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EBX Considers Korea Pact
Executives from SK Group were in Brazil last week to study potential new businesses with Grupo EBX. According to EBX, the South Korean industrial conglomerate is particularly interested in working with EBX in the infrastructure and natural resources sectors. In October, SK Networks, a subsidiary of SK Group, invested $700m in MMX, the mining subsidiary of EBX. The deal made SK the third largest shareholder in the company. The delegation met with executives from EBX subsidiaries MMX, LLX, OGX, MPX, OSX and REX, and reviewed the Acu Superport and mines in the Serra Azul region. EBX, the umbrella company for Eike Batista’s various businesses, is investing $15bn through 2012 in the petroleum, logistics, energy, mining and offshore sectors in Brazil.
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Xignux Selling Iron Castings Unit
US-based Revstone says it has agreed to acquire Mexico-based industrial manufacturer Xignux’s Tisamatic subsidiary for an undisclosed amount. Tisamatic produces high precision iron castings for the automotive sector, in addition to home appliances, cast iron connections, and soil pipes. It produces more than 60,000 metric tons of vertical molding and soil pipe. Its 133,000 sq. ft. facilities include 4 electric furnaces, 5 shot blast machines, 6 shell machines, 3 centrifuge machines and other related casting equipment. The transaction is under due diligence and is expected to close in the first half of the year. A Revstone spokesman declines to comment on deal value. However, he does say that Revstone is interested in making more acquisitions in Mexico. On January 12, Revstone announced it was acquiring a magnesium die casting facility in Chihuahua from Compass Automotive for an undisclosed price. Revstone did not use financial advisors.
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Republic Gold Seeks Financing for Bolivia Project
Australian miner Republic Gold is working with Bolivian securitization specialist BDP Sociedad de Titularizacion to raise up to $180m equivalent in a BOB-denominated structured note. The securitization will be used to finance the development of the Amayapampa gold project in Bolivia, BDP general manager Jaime Dunn tells LatinFinance. Republic had previously announced it would need $136m to bring the project to production. The structured note, Dunn says, will have a tenor of 10.4 years and will have a partial capital guarantee. The parties are still seeking the necessary authorizations from Bolivian regulators to finalize terms of the arrangement. Dunn says Republic expects to complete funding in 6 months.
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Grupo E Fibra Delayed
Grupo E has delayed a deal to issue Mexico’s first Fibra, or REIT transaction, expected to price Thursday. A banker on the deal says more formal information will be announced today. The Grupo E deal had been expected to sell 230m certificates with a projected range of MXP21-MXP23 each. The vehicle, known as Fibra Uno, consists of 12 industrial, commercial, office, and mixed use properties located throughout Mexico and totaling 484,000 square meters. Grupo E consists of 60-70 owners, led by the El-Mann and Attie families. Proceeds from the sale will be used to fund the acquisition of 5 additional commercial and mixed-use properties totaling 189,000 square meters. In accordance with Mexican regulations, the trust will distribute 95% of its income. The transaction has been awaited ever since regulators approved the asset class for sale in Mexico’s equity market in 2010. Santander is lead coordinator in Mexico, with BAML and UBS as global coordinators and Mexican bookrunners and Protego as a Mexican bookrunner.