The State of Mexico is arranging a 19.9 year MXP610m enhanced loan from Banorte, which will pay a spread of 125bp over TIIE, which closed at 4.8450 yesterday. Moody’s has assigned a Baa3/Aa2.mx rating. The loan is payable through a trust, to which the state has pledged the flows and rights to 100% of its federal participation revenues and to 25% of its revenues from the Fondo de Apoyo para el Fortalecimiento de las Entidades Federativas. The rating reflects the underlying creditworthiness of the State of Mexico, which has a Baa2/A2.mx rating, as well as the features of the loan. These include a strong trust structure, estimates that cash flows generated will provide strong debt service coverage ratios, a moderate level of reserves and strong historical cash flows. The last rating action Moody’s took with respect to the State of Mexico was on August 27 2010, when Moody’s assigned ratings of Baa3/ Aa2.mx to its MXP2bn Municipal Lending Program.
Category: Regions
Su Casita Defaults on Debt Payments
Mexico’s mortgage lender Hipotecaria Su Casita says it has defaulted on MXP730m, including MXP306m in long-term debt. Su Casita last week presented a restructuring plan to holders of MXP8.74bn in debt, offering longer-dated new debt and equity. The deal represents recovery of 70% in the case of short-term debt, and 51% for long-term debt holders, Su Casita says. As a result, Moody’s downgraded the ratings of the mortgage lender’s senior unsecured debt and global scale local currency to Ca from Caa2. The ratings are on review for possible downgrade. 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 TIIE plus 250bp (7.345% all in), 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. Su Casita, 40% owned by Spain’s Caja Madrid, has been seeking alternatives since a deal to sell itself to BBVA Bancomer fell through in September. Rothschild is advising on the restructuring, according to a company official.
DF Lands Oversubscribed Retap
The government of Distrito Federal has raised MXP2bn through a 2.1x oversubscribed dual tranche re-opening. A banker on the deal says both tranches priced 10bp inside guidance. The MXP500m floating rate tranche pays TIIE flat, while the fixed rate tranche for MXP1.5bn pays Mbonos plus 105bp. The maturities are for 4 years 8 months and 9 years 8 months respectively. Around 40 accounts participated, including Afores, insurers, mutual funds and private banks. The bonds are rated AAA on a national scale, with the funds destined for public works. Part of the proceeds will go towards financing Line 12 of the subway system, according to a banker at the lead. The bonds were sold though a trust using a structure in which the federal government is technically the issuer, since DF is not permitted to sell bonds on its own. Interest on the debt will be serviced by federal tax disbursements earmarked for the capital. Deutsche was the lead. DF raised MXP2bn in the June sale, after receiving MXP8.7bn in orders. The MXP900m 2015 tranche paid TIIE plus 14bp, while the MXP1.1bn 2020 portion offered Mbonos plus 90bp.
Venezuela, Argentina Get CAF Financing
Venezuela is getting 2 loans worth a total $700m from CAF, one for $600m to finance the Tocoma hydroelectric plant and the other, for $104m, to improve mass transit. CAF also approved a $500m loan for Argentina to be invested in an electric power line project. Terms were not released.
Titularizadora Colombiana Issues RMBS
Colombian mortgage securitizer Titularizadora Colombiana has issued COP360bn ($201m) in residential mortgage backed securities due in 2020. The AAA rated notes priced at par to yield 2.20%. Demand was 3.5x the amount offered, the company says in a statement. About 43% of the notes are backed by mortgage loans originated by Bancolombia, 26% by BCSC and 31% by Davivienda. The company handled the issue itself.
Hochschild Boosts Inmaculada Stake to 60%
Peruvian mining company Hochschild is acquiring a 30% stake in the Inmaculada gold and silver project in the southern part of the country, bringing its total stake to 60%. The deal involves an initial cash consideration of $15m, an agreement to fund the project’s first $100m of capex and a $20m private placement with Arizona-based joint venture partner International Minerals, which is selling the 30% to Hochschild. The buyer says in a statement that based on spot prices of $1,300/oz and $22.1/oz for gold and silver respectively, the project could return a cumulative total pre-tax cash flow of approximately $1.0bn, equivalent to $699m at a 5% discount rate and $483m at a 10% discount rate, with an internal rate of return for the project of approximately 58%. The transaction is due to close by the end of the year.
Inbursa Hits Bond Target
Inbursa has sold MXP5bn in 3-year bonds on an orderbook that was 1.7x oversubscribed, according to a banker at one of the leads. The bonds pay a spread of TIIE plus 20bp, in line with guidance. Bank treasuries and mutual funds were the main buyers, with some participation also coming from private banks. Use of proceeds is to maintain the bank’s liquidity profile, says the banker. The transaction was through Inbursa and BBVA Bancomer and is rated AAA on a national scale. The deal follows on from the bank’s August bond issue, its first since it was set up in 1993. The bank issued MXP5bn in 5-year paper at TIIE plus 24bp.
Oaxaca State Achieves Baa2 Rating
Moody’s has assigned a Baa2 rating to a MXP250m ($20m) enhanced loan the State of Oaxaca obtained from Scotiabank. The ratings reflect the creditworthiness of the state. The loan is denominated in MXP, with maturity of 10 years and a grace period of 12 months for principal payments. The loan will pay an interest rate composed of the 28-day Mexican interbank rate, plus a spread.
OHL Lays Mexico IPO Foundation
Spain’s Obrascon Huarte Lain has applied for an IPO on the Mexican Bolsa, according to regulatory documents. The Spanish builder and concession operator had earlier said it was considering the sale, and does not give specific detail for the deal in its filing. It has hired Credit Suisse, Santander, BBVA and UBS to manage, according to sources familiar with the transaction, and is targeting a November sale. The listing of the OHL Concesiones Mexico unit should raise $500m to $1bn, according to market sources, and give Mexico the large debut investors have been waiting for during a year characterized by small and mid cap IPOs. OHL is building and wholly owns the Bicentenario elevated Mexico City toll road, Libramiento Norte de Puebla road, and latter phases of the Circuito Exterior Mexiquense road. It also operates the Circuito Exterior Mexiquense Phase I road, Carretera Amozoc-Perote road and Toluca International Airport, of which it owns 87%, 55% and 33%, respectively.
Scotia Sinks, Compartamos Swims
Scotiabank Tuesday raised MXP2.67bn in Mexico, short of the MXP3.5bn it was aiming to issue and wide to expectations. The bank issued a $2.312bn 5-year at TIIE plus 40bp and a MXP358m 7-year at TIIE plus 49bp. Price talk for the AAA rated bonds had been in the 35bp area for both tranches according to an investor. Another investor adds that several banks have already issued this year, and so the buyside has sufficient AAA rated and bank paper. The bonds were issued to refinance MXP2bn that was due in September, MXP700m maturing in November and MXP800m due in December, according to investors. Meanwhile, Banco Compartamos was oversubscribed, as investors considered the spread and the AA rating attractive. The microfinancing bank that lends only to women issued a 2015 bond at 130bp, with the book 1.6x oversubscribed and closed in under an hour, according to a banker at sole lead BBVA Bancomer. Guidance had been 125bp-135bp, refined from an earlier 130bp-140bp over TIIE. The bonds are 50% amortizing in the 4th year and 50% amortizing in the 5th year. Compartamos was sold to banks, private banks and asset managers. It is the longest tenor issued by the bank, with previous bond issues only going up to 3 years, adds the banker. Proceeds will be used to extend its lending portfolio.