Category: Regions

Leads on the planned MXP6bn Telefonica bond issue declined late Wednesday to state guidance, although they confirm that the auction will happen today. Bankers at leads BBVA Bancomer, Santander and HSBC had been expected to give official talk on the AAA deal yesterday. But they declined, saying they had still not received feedback from some major investors. A handful on the local buyside tell LatinFinance they would not participate because of the potential impact on the telecom’s rating of its planned takeover of Vivo. The Telefonica Finanzas Mexico unit wants to issue to refinance existing debt. Investors say pricing on the 2020 fixed rate tranche is being discussed at Mbonos plus 120bp-140bp. The buyside is hearing TIIE plus 45bp-70bp on a 2014 floater. However, some say Mbonos plus 160bp-180bp and TIIE plus 100bp would be more appropriate given the M&A risk. The transaction will be the company’s first issuance in Mexico since 2006, when it raised MXP4.5bn in floaters due to mature in September.

Mexico’s Banorte has priced $300m in 2015 bonds at 99.725 with a 4.380% coupon to yield 4.437%, or UST plus 262.5bp, in line with 262.5bp guidance. Investors generally spotted the pricing as fair, and note the rarity value and overall strength in the Mexican financial sector. The deal drew more than $600m in orders, according to a banker on it. JPMorgan managed the sale, rated A3//BBB minus, issued through its Grand Cayman Branch. It was Banorte’s first bond in 4 years, following a $600m subordinated sale in October 2006 through Credit Suisse, Morgan Stanley and UBS, according to Dealogic. The issue follows investor meetings at the end of June.

Mexican corporates face liquidity risk because of reliance on informal banking relationships and the assumption that capital markets will remain open, Moody’s warns. “It is unbelievable that some Mexican companies continue to be very aggressive, using short-term debt to fund long-term positions and refinancing at the last minute,” says Nymia Almeida, senior analyst at Moody’s in Mexico. “Corporates need to plan what will be their alternative means of financing if they do not have market access. They can’t just assume banks will be there,” she tells LatinFinance. In a recent report, Moody’s acknowledges that most Mexican corporates have extended maturities, but it sees irregular access to local capital markets and the unreliability of bank financing as potential risk factors. Cablemas and Axtel are among the issuers most vulnerable to liquidity risk. Cablemas faces being over reliant on external financing, while Axtel’s liquidity has worsened as a result of revenue contraction. Televisa’s commitment to Cablemas mitigates the downside. “There has been improvement but this is still not enough,” says Almeida. “There are hardly any committed credit facilities, there are still margin call risks and there are still not clear policies on the management of risk,” she adds. According to Almeida, covenant packages are weak and could be tested in a worst case scenario. They sometimes miss upstream guarantees for opco subsidiaries on debt at holding companies, and in some cases omit basic cross default or negative pledge clauses. Foreign exchange risk is also high because of currency mismatches. For 67% of the 21 corporate issuers cited by Moody’s, dollar exposure is not fully covered by dollar cash flow. However, leverage is relatively low. The median adjusted debt to Ebitda for the 21 corporate issuers domiciled in Mexico tracked by Moody’s was 2.5x for the 12 months ended March 31. America Movil and Bimbo are the only ones with committed facilities, which Moody’s considers es

A. Schulman, the supplier of high-performance plastic compounds and resins, has named Francisco Castillo as managing director of Mexico, effective July 1. He will report to Gustavo Perez, business unit leader of Masterbatch for the Americas. Castillo was previously president and CEO at ThyssenKrupp Mexinox, a stainless steel cold rolling operation based in San Luis Potosi. “Our operations in Mexico will play an important role for A. Schulman as we continue to expand our capabilities to serve the growing market demand,” says Perez. A. Schulman reported revenues of $1.3bn for the fiscal year ended August 31.

JPMorgan has appointed former US senator and HUD secretary Mel Martinez as chairman for Florida, Mexico, Central America and the Caribbean. He will serve on JPMorgan’s executive committee and be the firm’s senior executive for the region, covering clients including large corporations, non-profits and governments. Orlando-based Martinez was previously a partner at DLA Piper.

Grupo Financiero Monex has listed on the Mexican Bolsa, placing 400m shares with a value of MXP20.00 each, says an official at the asset manager. The MXP8bn amount is not new capital, but merely represents existing shares held mostly by company management and employees. Monex is the second Mexican issuer to use the new SAPIB registry, following Proteak’s late June issue. Regulators created the SAPIB designation to give smaller issuers more flexibility in reaching governance standards. Monex self-led the listing.

Grupo Mexico says it has acquired a 10% stake in airport manager Grupo Aeroportuario del Pacifico (GAP). Grupo Mexico says it does not intend to take a significant stake in GAP, but will exercise its right to name an independent advisor during GAP’s July 22 meeting.