NY-based private equity firm Conduit Capital plans to invest about $100m to build 2 hydroelectric plants in Mexico, say sources close to the shop. One of the projects, Cerro de Oro, will generate about 14MW and the other, Veracruz, will generate about 30MW. Construction should be completed in about 2 years. About half of the funds will come in the form of equity and the rest from bank financing. Conduit is already in talks with several banks, the sources say without disclosing names. The equity portion will come from the Latin Power III fund and Asergen, Conduit’s partner in the projects. The firm, which has plans to open an office in Mexico, is also seeking to invest in wind projects, but no specific plans have been revealed.
Category: Regions
Posted inDaily Brief
DF to Fund MXP38bn Subway Expansion
Mexico City’s Sistema de Transporte Colectivo (STC) expects to approach financial markets to help fund part of a MXP38bn expansion of its metro. Construction and development of the city’s new subway line, Linea 12, will consist of 2 separate funding packages, STC’s finance director Miguel Angel Avila tells LatinFinance. The first, which is estimated to come in at around MXP20bn, will finance construction and development of the line’s basic infrastructure. It will use a mixed financing structure funded by city and federal taxes. The second package – to build the trains, buy service equipment and maintain the safety and efficacy of the line – is expected to cost some MXP18bn over the next 17 years. Distrito Federal will issue a dual tranche 4-year 8 month and 9-year 8 month deal next week, via Deutsche, for up to MXP2bn. The funds are slated for infrastructure spending, at least part of which will go toward Linea 12 construction, according to a banker at Deutsche.
Posted inDaily Brief
Ixe Preps Hybrid Bond
Mexico’s Ixe is preparing to issue $120m in 10-year junior subordinated bonds, according to Fitch, which assigns a B+ rating. Goldman Sachs is heard managing the new bond sale, of which the timing is unclear. The bank’s only previous dollar bond, according to Dealogic, was a $120m 9.75% perpetual bond in 2007, managed by Goldman. “Ixe has adequately faced the tough recent operating environment by maintaining good asset quality, sound capital levels and ample liquidity despite continued growth in overall business volume,” Fitch says, noting also relatively limited loss absorption capacity, high borrower and risk concentrations and challenges associated to rapid loan growth and business diversification. Ixe and larger Mexican bank Banorte have been the subject of rumors this week regarding a merger or sale to Banorte.
Posted inDaily Brief
Jamaica to Meet Investors
Jamaica is set to meet investors in Europe beginning next week, according to a finance ministry official, with plans to meet the US buyside later in the month. Citi is managing the meetings, which are “non-deal.”
Posted inDaily Brief
Panama Aims for Sub 2% Samurai
Panama is hoping low global rates – especially in Japan – mean a Samurai issuance next year price through recent sovereign deals done with a JBIC guarantee. “The economic future of Panama is very much tied to Asia, and we want Asian investors to know Panama and be comfortable taking Panamanian risk,” Diego Ferrer, head of institutional relations at Panama’s public credit office, tells LatinFinance. The JBIC-wrapped deal should be $500m equivalent at 10 years and be completed by the end of January, he explains, to meet a debt maturity in February. The sovereign, with 3 out of 3 investment-grade ratings as of June, is aiming for a coupon under 2%, Ferrer says, which would be lower than Mexico, Colombia and the other issuers tapping that market in the past year under the JBIC program, which offers a 95% guarantee. After swapping to dollars, it would come in line with Panama’s curve, he says. The issuer is in the process of selecting banks for the transaction and should be helped by low interest rates, an increase in Japanese appetite for EM credit and Panama’s scarcity value, Ferrer says. Mexico was the last sovereign to hit the Samurai market, raising JPY150bn ($1.7bn) in 2019s at 2.22% coupon in December 2009. It has plans to tap again before the end of the year.
Posted inDaily Brief
Cablemas Rating Rises
Fitch upgraded the ratings of Mexico telecom Cablemas to BB from BB minus to reflect the company’s improved financial profile and stable debt levels. Fitch expects leverage measured as total debt to Ebitda will remain between 1.5x and 2.0x in the medium term. In addition, it says the company’s debt maturity schedule is manageable. Total debt-to- Ebitda for the last 12 months ended June 30 is 2.1x, down from 2.3x in 2009.
Posted inDaily Brief
Debt Payments Bring Univision to Table
Univision’s need to extend its debt load likely played role in bringing it to the negotiating table with Televisa, says Enrique Senior, MD at Allen & Co, which advised the latter on its buy. Univision has approximately $8bn in debt coming due in 2014 from its original sale in 2006, with about another $2bn maturing in 2015. Meanwhile, its programming license agreement with Televisa, which provides 90% of Univision’s prime time content, expires in 2017. “I don’t think any bondholder would have extended past 2017 without those agreements in place,” Senior says. Univision also commands sole US distribution rights to Televisa content. With a more attractive fee structure in place, analysts estimate that Televisa can expect to monetize significant portions of its media library in the growing US market. “The US marketplace is of paramount importance to Televisa’s strategy of expanding our reach beyond Mexico and maintaining our leadership as the leading media company in the Spanish-speaking world,” says Alfonso de Angoitia, EVP at Televisa. “Accordingly, we have been working diligently to realize the value of our content in the US. We are confident that this investment in Univision achieves our objectives while positively improving our financial results from day.”
Posted inDaily Brief
Fertilizer Bond Returns at Higher Yield
Mexico’s Fertinal is attempting a new bond issue again, back with tighter covenants and a higher yield. Investors say the fertilizer producer was looking to get the $200m 2015 NC3 deal done this week at a 13.5% yield. UBS is managing the sale, postponed last week after the buyside did not bite at 12% handle talk. Proceeds from the B/B2 rated issue are marked for a $180m bridge, to partially finance capex and support working capital. The bridge is being used to reacquire assets from former creditors and satisfy other obligations associated with bankruptcy, according to Moody’s.
Posted inDaily Brief
Bolivia Gets Ratings Upgrade
Fitch has upgraded Bolivia’s rating to B+ from B. the outlook is stable. The rating upgrade reflects Bolivia’s strengthened fiscal and external balance sheets, the economic authorities’ demonstrated ability to preserve macroeconomic stability, as well as a recent track record of timely debt payments, Fitch says. The economy’s resilience was evidenced by a real GDP growth rate of 3.4% in 2009, while growth for 2010-2011 will remain above 4%, according to Fitch, driven by a recovery in external demand and a strengthening of consumption and public investment expenditure.
Posted inDaily Brief
Mexico Pays For Duration
Locking-in historically low interest rates available to quality LatAm issuers, Mexico has sold the first 100-year bond from a sovereign in the region, knocking the 2040 by pricing at a premium. The $1bn bond priced at 94.276 with a 5.750% coupon to yield 6.100%, or 30-year UST plus 235bp, in line with 6.100% area guidance. It was heard up 1pt in the gray at the end of the day Tuesday, with traders noting a 1pt drop in UMS 2040. Investors spot the premium to Mexico’s outstanding 30-year at 95bp-100bp, with bankers on the deal indicating 90bp-95bp. “We are at historic lows, and could potentially not see such low yields across the globe for a long time. You have to look at it from that perspective, even through they paid a bit of a premium,” Paul Biszko, EM strategist at RBC, tells LatinFinance. He notes the impact on the long end of the curve should be temporary. “This is what happens at the top of the market – they are securing this cheap financing for a long period of time,” says a West Coast EM investor who passed due to an overweight on Mexico. Bankers on the deal say an August $250m retap of BBB US railroad Norfolk Southern’s 100-year came 90bp wide to its 30-year, serving as a price reference. UMS has been heard considering the structure, though the market and issuer were surprised by the final $1bn size, upsized from $500m on about $2.6bn demand. “This was a non-obvious trade, but we’ve noticed the appetite for long-duration assets has increased in this low interest rate environment,” Gerardo Rodriguez, Mexico’s deputy undersecretary for public credit, tells LatinFinance. He says Mexico got the idea following a few corporate century issuances this year, and decided to take advantage of an all-time low yield environment. “Ahead of the transaction the question was weather we could break the negative dynamics around 100-year transactions,” he says, with deals characterized by low investor participation, small size, and low liquidity. Century issuance from Norfol