Category: Regions

Televisa cancelled its much-anticipated 10-year bond issue for up to MXP10bn that was expected yesterday in the domestic market. HSBC and Santander were managing the deal, rated AAA on a national scale. A lead banker said it was due to volatility in the market, and that because the company had no immediate need to issue it chose not to go ahead with the transaction. “The issuer will probably head to the international market instead now as it is deeper, which is more favorable for an issue of this size,” adds the banker. Investors say that the level of recent activity, with bond issues this week by Banamex for MXP6bn and Infonavit for MXP1.5bn, could have also saturated the local bond market. “It is an astute move not to issue, given market conditions, as there could have been a danger of low participation,” says a local investor. Another said an exact price for the transaction had not been defined, but he would have expected around Mbonos plus 120bp.

Televisa is expected to issue a much-anticipated MXP10bn bond issue today in the domestic market. HSBC and Santander are managing the deal, rated AAA on a national scale. Elsewhere, Infonavit Wednesday issued MXP1.5bn equivalent in a UDI-denominated RMBS deal. Banamex and HSBC were joint leads on the deal, rated AAA on a national scale. The 2038 bonds pay a spread of Udibonos plus 260bp, with the book 1.5x oversubscribed, according to a lead banker. The bonds have an average life of 4 years. “Given the low rates we are seeing at the moment this was a fairly priced deal,” says an investor. Banamex meanwhile issued MXP6bn bonds in a dual tranche deal. A 7-year floater was for MXP4.67bm and priced at 35bp over TIIE, while a 10-year fixed rate tranche priced at 120bp over Mbonos. The issuer had been expected to issue up to MXP7.5bn, though one investor says it preferred to price at a competitive spread than to go for bigger size. The book was over 1.5x over-subscribed, according to a lead banker.

Moody’s expects Mexico’s housing sector to continue growing, on the back of stable home prices, a growing younger population and an ample supply of mortgage credit for low-income housing. Of the 7 homebuilders Moody’s rates, 6 are on stable outlook, and the majority are among the biggest in Mexico, it says in a report. They are able to thrive thanks to economies of scale, access to capital and sophisticated operating platforms. “Our outlooks on the homebuilders take into consideration their increased growth in 2010, while we expect them to maintain leverage, particularly short-term debt, at modest levels,” Moody’s says. The agency adds that operators have been managed to generate free cashflow and with many increasing land inventories, they are expected to grow. However, it notes that Mexico’s multi-purpose finance companies, Sofomes, have faced rising delinquencies in their loan portfolios, liquidity shortfalls and limited access to capital. Of the 3 rated by Moody’s, 2 are on negative outlook. The sector had previously relied on the securitization market to provide loans, but as this has slowed down it has relied more heavily on the Mexican government’s SHF. However, as this had led to more regulation, it adds to their difficulties and threatens the viability of the structure of Sofomes, says Moody’s.

Mexico-based English school company Harmon Hall is welcoming the IFC, German development bank DEG and HSBC’s LatAm private equity division as shareholders, which together are taking a 40% stake for an undisclosed amount. According to information from the IFC, the new shareholders are investing about $20m, of which the IFC is providing an $8m equity investment. The remaining 60% is held by Mexican PE shop Nexxus, says Nexxus associate Juan Carlos Gavito. He explains that proceeds from the deal will be used to expand the company organically and via acquisitions in Mexico. “We have studied several options already,” he tells LatinFinance. Harmon Hall was established 45 years ago and has 124 schools in Mexico and 2 in Guatemala.

MegaMex Foods, a joint venture between US-based food company Hormel and Mexico’s Herdez del Fuerte, which is 50% owned by Grupo Kuo, is acquiring California’s Don Miguel Mexican Foods. Financial terms were not disclosed, but a Mexico-based equity analyst estimates the deal is worth MXP1.6bn ($123m), or about 8.5x Ebitda. He adds that it will be financed with a combination of debt and cash on hand. The sellers are California-based private equity shop TSG Consumer Partners and Don Miguel chairman Steve Charton. Don Miguel, founded over 100 years ago, was acquired by Charton in 1990. TSG invested in the company in 2002. James O’Hara, managing director at TSG says that the shop held a majority stake in Don Miguel, while Charton held a minority stake. He would not disclose how much each held nor confirm the sale price. Piper Jaffray advised the sellers while Chicago-based boutique investment bank JH Chapman advised MegaMex.