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.
Category: Regions
Posted inDaily Brief
Ixe Cancels Mexicana Flight
Ixe does not plan to continue in Grupo Mexicana de Aviacion’s restructuring process, it says. The bank had previously said it was considering a small stake in the airline, if it was able to successfully reorganize its finances and resume operations. Bankrupt Mexicana stopped operations earlier this year, with holdco Tenedora K, a company formed by Mexico’s Grupo Industrial Omega and Grupo Arizan, buying control from owners including Ixe.
Posted inDaily Brief
Mexican Gym Winded on First Day
Grupo Sports World traded down 1.5% to MXP15.75, the day after pricing 53.6m shares at MXP16.00 to raise MXP857m.The Mexican bolsa dropped 0.33% on the day. The Mexican health club chain formerly owned by private equity fund Nexxus Capital says 1,657 investors bought the deal, 54% of them institutional. The deal represents a 61% float and Sports World claims it is the first pure fitness company to publicly trade in LatAm. The exit represents the third stock market exit for Nexxus, which keeps about a 20% stake, and will “maintain a significant influence in the company,” Sports World says.
Posted inDaily Brief
Volkswagen Leasing Taps Mexican Market
Volkswagen Leasing on Wednesday issued MXP1.5bn in 4-year bonds, after receiving an order book that was 5x oversubscribed, according to a banker on the deal. “There is deep demand in the market for this tenor, and the transaction also shows that appetite has returned for bonds issued from this sector,” says the banker. The leasing unit of Volkswagen’s Mexico operations will pay a spread of 60bp over TIIE, the low end of 60bp-65bp guidance. Banamex and ING were joint leads on the deal, rated AAA on a national scale. Proceeds will be used to finance lending.
Posted inDaily Brief
Conduit Capital Investing In Mexico
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.
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.
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Brazil’s Talent Group Sells to Publicis
France’s Publicis Groupe says it will acquire a 49% stake in Brazilian advertising agency the Talent Group. Publicis also received options that could lead to a majority stake in the future. According to press reports, the $110m deal implies a $220m valuation for the EUR50m revenue company.
Posted inDaily Brief
Large-Ticket Mexican M&A Seen Growing
Heightened liquidity in Mexico’s markets could mean more M&A deals at the larger end of the scale, amid an overall pickup, says the co-founder of one of the country’s newer boutiques. “There are a lot of middle-sized M&A transactions getting done, and we expect to see a couple of the large deals getting done in the second half of the year,” Ricardo Cervera, partner at boutique investment bank Vace, tells LatinFinance. Consolidation is driving activity of all sizes, especially in sectors such as telecoms and media. Also, liquidity is on the rise in Mexico, despite volatility, and this should help bring about bigger ticket M&A deal going forward. Cervera, a former head of Mexico investment banking at Citi, started the shop at the beginning of last year with Carlos Vara, former head of LatAm investment banking at Citi. They are advising condom manufacturer Sico on a sale to a US publicly-traded buyer which he declines to identify. The deal should close in the next 2 months, for about $120m Cervera says. About 50%-60% of Vace’s business is in M&A, with the remainder in private debt placements, CCDs and restructurings. Transactions vary from $30m-$600m in size, he says. The firm is also tying up a structured debt transaction for payroll discount lender Credito Maestro, borrowing from a group of US hedge funds, for about $100m. This follows an earlier $70m raise with a local hedge funds. Among the firms larger advisory roles have been on OHL’s MXP6.5bn financing of the Viaducto Bicentenario highway, and the $250m sale of control of Farmacias del Ahorro. Cervera believes there is room for the increasing number of boutiques in Mexico. He sees new opportunity in the CCD market and from the Afores’ new ability to play in small IPOs. However, he says it is important for smaller shops to be wary of entering deals that are particularly labor intensive, drag on for long periods of time, and may end up not happening.
Posted inDaily Brief
Peru Rate Hike Expected
Peru’s central bank is expected to tighten its monetary policy rate today. Morgan Stanley forecasts it will hike 25bp to 3.25%, less than the 50bp increase seen in August and September, due to low inflation. Barclays also expects a 225bp hike, with the rate ending at 3.5% by the end of the year. Bank of America Merrill Lynch meanwhile predicts a 50bp hike. It expects Peru to end the year at 4.25%.