Category: Regions

Moody’s has downgraded Mexico-based home developer Sare Holdings’ ratings to B2 from B1. It also changes the outlook to stable from negative. The ratings agency says the actions reflect the company’s continued operating profit and credit metrics weakening, specifically interest coverage and debt to Ebitda. Sare also has struggled with working capital issues related to its significant high-rise development of middle- and higher-income buildings, which continue to place pressure on the company’s receivables collection cycle. Debt/Ebitda was 6.13x for Q2, 5.65x for year end 2009 and 5.28x for year end 2008.

Mexico’s central bank is not expected to change its monetary policy rate of 4.5% in today’s meeting, judging by its cautious tone in the Q2 inflation report, according to Morgan Stanley. Bulltick thinks the bank will start tightening in H2 2011, with the rate ending next year at 5.25%.

Ernesto Cordero Arroyo, head of Mexico’s Hacienda y Credito Publico, has appointed Jose Antonio Meade Kuribrena to replace Alejandro Werner, who resigned as deputy finance minister, according to a statement issued by the ministry. It also confirms that Jose Antonio Gonzalez Anaya replaces Meade as undersecretary for revenue. Carlos Alberto Garza Ibarra, the former head of coordination with regions, will take over from Gonzalez. Ignacio Quesada Morales will replace Garza. He was previously a social development ministry official. Werner will be going to Spain to pursue academic opportunities, according to a source at Hacienda. Meade has previously been head of the Rural Credit Bank and the Rural Development Bank. Gonzalez was previously senior economist at the World Bank for Paraguay, Bolivia and Peru. Analysts at Goldman Sachs’ EM economic research team say taking over from Werner would be difficult because of his strong credibility in the financial markets, but said the replacements made were good appointments, because of their strong public sector experience.

Prudential Mexico has raised MXP3.7bn from the sale of Certificados de Capital de Desarrollo (CCDs) in Mexico’s domestic market, according to a source familiar with the deal, the largest CCD this year. The 10-year transaction supports a real estate fund making investments in industrial assets in Mexico during a 5-year period. The CCDs priced at MXP1 each, according to regulatory documents, and the deal offers a return profile in line with private equity industry standards. Investors get their initial investment plus a preferred return, in this case 12%, and proceeds are divided 80% to holders and 20% to Prudential. Prudential is heard putting MXP600m of its own capital into the deal. It had been aiming to raise MXP4bn, also including its own contribution. It is Mexico’s second real estate CCD, after a MXP3.3bn transaction from AMB closed last month, and the largest so far in that space. Prudential has raised 2 previous industrial funds in Mexico through traditional PE means, among 7 real estate funds totaling about $2.4bn in equity commitments. BBVA Bancomer managed the transaction. Also expected to close in the next 6 weeks are infrastructure fund CCDs from LatAm Capital Advisors and I Cuadrada.

State of Mexico (Edomex) has finally issued an innovative MXP4.065bn 20-year deal securitizing future flows of income from residential property title fees, which it had been working on since the middle of last year. The 2030 Edomex deal has a 14-year average life, pays fixed rate and is divided into 2 tranches. An MXP2.765bn tranche features a 100% guarantee from OPIC and was priced at 132bp over Mbonos, paying a 7.86% coupon. Total demand for the tranche was MXP3.83bn, says a banker on it. It is rated AAA on a national scale. It is the first time OPIC has fully guaranteed a transaction in the local market outside the US, say bankers at the leads. The MXP1.3bn tranche carries a 30% first loss guarantee from CAF, it is rated AA on a national scale and was priced at Mbonos plus 359bp, with a coupon of 10.13%. Total demand for the second tranche was MXP1.621bn. The deal had taken so long to complete because of hold ups at the regulators, due to the novel nature of the transaction, according to a banker at one of the leads. The deal had taken so long to complete because of hold ups at the regulators, due to the novel nature of the transaction, according to a banker at one of the leads. Banamex and HSBC managing the sale, which was structured by MBIA. Of the proceeds raised, 15%-20% will go towards improving the infrastructure of the state’s public registry offices and the rest will go towards infrastructure projects in the State of Mexico. A banker at one of the leads claims it is the first of its kind and could be replicated by other Mexican states. It marks the first sizeable non-residential mortgage ABS in Mexico since the federal government raised MXP32bn on behalf of its states in a transaction backed by the FEIEF oil stabilization fund in September 2009.