Moody’s has assigned a Ba3 rating to Elementia’s proposed MXP3bn senior unsecured 2015 notes and a Ba3 corporate family rating to Elementia with a stable outlook. The company manufactures semi-finished copper, aluminum products, fiber cement and concrete products mainly in Mexico and also in Central and South America, The proceeds of the issuance are expected to refinance about half of the debt from any existing $450m 5-year term loan. The ratings rationale is that the company has a solid market position, is in several markets and has modest financial leverage. It also has solid profit margins and expected stable earnings, says Moody’s. However, it adds that the company has a limited operating scale and business diversification and is also exposed to base metal cycles.
Category: Regions
Interacciones Plans Covered Bond Spree
Mexico’s Grupo Interraciones, which specializes in sub-national and public infrastructure financing in Mexico, is looking to issue $2bn equivalent of covered bonds in local and international markets, and $280m of subordinated debt in the next 4 years, Gerardo Salazar, CEO of the bank tells LatinFinance. Banco Interacciones is looking to do 3 bond issues a year over this period. The bank is looking to issue the first covered bond before the end of 2010 for MXP3.5bn. It is eyeing maturities of 10-15 years. The deal will be the first covered bond to be issued in Mexico, says Salazar. International markets the bank would look at for further bond issuances are the UK and US. “Mexico is offering attractive yields, long term investments and has stable financial markets,” says Salazar. “We expect to be able to attract institutional investors, including insurance companies, local and international pension funds and mutual funds to our bond issues,” he adds. Salazar says 85% of Interacciones’ assets are in government debt. Nacional Financiera is structuring the deal.
BTG Heard Discussing SWF Stake Sale
Brazil-based investment bank and asset manger BTG is heard to be in talks about a private equity capital raise with Singapore sovereign wealth fund GIC. “We are discussing with GIC, among others,” says a senior BTG official. He declines to comment on the size of the stake being sold, other than to say, “It’s significant.”
Copec Pursues Proenergia
Chilean energy company Copec says it has launched an offer to acquire 4.9% of Colombia’s Proenergia Internacional for about $237m in cash. Copec already owns 47.2% of the target. On May 14, Copec acquired 100% of AEI, which gave it its stake in Proenergia. At that time, Copec revealed its intention to buy the additional stake. Proenergia has 53% of SIE, which owns 89% of Terpel’s business in Colombia. Copec will buy the shares in the Colombian exchange. Corredores Asociados will handle the transaction.
Ixe Raises Hybrid Note
Mexico’s Ixe has added to the subordinated portion of its capital structure, selling $120m in junior subordinated notes, according to a source with knowledge of the matter. The bank priced the B+ 2020 bonds at par with a 9.25% coupon, according to the source. Goldman Sachs managed the sale. The bank’s only previous dollar bond, according to Dealogic, was a $120m 9.75% perpetual bond in 2007, also managed by Goldman. Ixe and larger Mexican bank Banorte were the subject of rumors last week regarding a merger, or sale to Banorte.
Mexico Samurai Takes Time
Mexico’s Samurai bond should happen towards the end of this month, the sovereign’s public credit head Gerardo Rodriguez tells LatinFinance. “We are working on the transaction, of course, and there is some discussion with investors, but we don’t have anything finalized yet,” he adds. Rodriguez declines to comment on talk that price discussions are in the range of the yen swap plus 50bp-60bp. The sovereign is expected with a 10-year bond of around JPY150bn yen ($1.8bn), guaranteed by JBIC. Nomura, Mitsubishi UFJ Morgan Stanley and Mizuho are managing the sale. Mexico’s December 2009 Yen bond sale raised JPY150bn in 2019s to yield 2.22%, or yen swaps plus 80bp.
Moody’s Chops Su Casita Debt
Moody’as has downgraded the ratings of Mexico mortgage lender Hipotecaria Su Casita’s senior unsecured debt and global scale local currency to Ca from Caa2. The ratings are on review for possible downgrade. The action follows the company’s announcement that it had presented a restructuring plan for all its debt to its debt-holders. Holders of MXP6.75bn in long-term notes denominated in pesos and dollars would receive MXP1.5bn in new 5-year debt guaranteed by non-operating assets, paying annual interest of interbank rate TIIE plus 250bp, MXP550m in new 3-year instruments guaranteed by non-operating assets, and MXP500m in 10-year subordinated convertible bonds with rates of 3%-8% representing 10% of the restructured company’s capital upon conversion as well as capital equal to 19.98% of the restructured company. Moody’s says this is a distressed exchange, which it considers a form of default.
Morgan Stanley Launches Mexico Platform
Morgan Stanley has set up a sales and trading team in Mexico and will launch its full broker-dealer offering by Q4, Dario Lizzano, director of LatAm equity research for Morgan Stanley tells LatinFinance. “In terms of market share we expect to be in the top 3 in 18 months’ time,” says Lizzano. The expectation that there will be an increase in trading volume locally and clients wanting on-the-ground expertise are among reasons to open a broker dealer, says Lizzano. “Today, the average daily trading volumes of LatAm equities are taking place 50% in local markets and 50% in ADR,” says Lizzano. “We expect growth in capital market activity to be faster at a local level and in 5 years plus we expect volumes to be 60% locally and 40% ADR,” he adds. Lizzano adds that Morgan Stanley wants a presence in Mexico in particular because it believes pension funds and other institutional investors will substantially grow equity exposure. The sales and trading team is led by Miguel Machado, who relocated to Mexico in the summer. Prior to this he was a senior sales person for the LatAm desk in the London office for 5 years. Victoria Mas will be the senior sales person. She joined in July from BBVA Bancomer, where she worked in the Mexico institutional equities sales team. Javier Diaz Rivera, hired in August, will be responsible for equity trading. He was previously in the equity trading division at Merrill Lynch for 10 years, where he worked as a senior trader on the LatAm equity desk in the Mexico and New York offices. Nikolaj Lippman was hired in August and will be the Mexican country analyst. He joined from Bankinvest Asset Management, where he was chief portfolio manager for 9 years, and reports to Guilherme Paiva.
Provimi Buys Into Mexico
Dutch animal nutrition company Provimi has acquired NASSA, Nutricion y Alimentos de Sonora in Mexico. A spokesman for Provimi declines to comment on the price of the acquisition, revenues of the target company, bankers advising on the deal, or whether Provimi would be interested in making additional acquisitions in Mexico or LatAm. He adds that it was funded by cash on hand. NASSA represents the first acquisition for Provimi in Mexico. It already generates EUR180m from its businesses in Argentina, Colombia and Brazil, where it says it operates the local market’s largest animal nutrition company. Provimi’s last acquisition was in Colombia in 2008.
Correction: Mexico Reported on Yen Road
An October 7 daily brief entitled “Mexico Reported on Yen Road” incorrectly identifies one of the managers on an upcoming Mexican bond transaction. Mitsubishi UFJ Morgan Stanley is one of three managers.