Category: Regions

Mexico’s Pemex will be holding New York meetings today with banks, looking for retail participation in a $3.25bn dual tranche syndicated loan, following on from meetings in Mexico Tuesday. The Mexican oil producer is looking for a $1.25bn 3-year revolver, to re-finance a loan maturing this month, for which it is offering a spread of 125bp over Libor. Bookrunners on the deal are Barclays, BBVA, Credit Agricole and RBS, with Credit Agricole as the administrative agent. It is also looking for a new money 5-year term loan for $2bn at L+150bp, for which BBVA, BNP Paribas, Credit Agricole, Citi, HSBC and Inbursa are bookrunners, with BBVA as admin agent. The revolver is to refinance a loan taken in 2007 for $1.25bn that was priced at Libor plus 20bp. Initial comments from some retail banks were that pricing was too tight, given current cost of funding for banks. One banker says the spreads should be double what is being offered in order to make pricing attractive for retail. “The spread on the 5-year is what current costs of funding are for 3 years, so it does not seem attractive from a retail point of view,” adds one.

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.