Mexico’s local bond pipeline is still in motion, although a few larger deals appear to have fallen foul of regulators and the World Cup. Recent deals from Pemex and Liverpool set benchmarks and prove there is investor appetite. Penoles could see its eagerly awaited MXP debut as soon as next week, bankers on the deal say, as it still must clear final regulatory hurdles that kept it from pricing this week as hoped. The silver miner wants to sell up to MXP7bn in 10-year fixed-rate and 5-year FRNs basis TIIE. BBVA Bancomer, HSBC and Santander are managing the sale, rated AA+ on a national scale. Elsewhere, Telefonica is roadshowing this week and heard still aiming for the last week of June to place a MXP6bn 2014/2020 deal from its Mexican unit, also via BBVA, HSBC and Santander. And State of Mexico should bring as soon as that week a novel MXP4.3bn 20-year deal securitizing future flows of income from residential property title fees, which was delayed from the beginning of the month, also by the regulator. Finally, Mexico City’s securitization of tax proceeds from the federal government is expected June 23. The government, which had been considering pricing yesterday, has the option of spreading the MXP2bn issue among a 2015 tranche basis TIIE, a 2020 paying fixed, and a 2025 portion denominated in UDIs. Deutsche Bank is managing the sale, rated AAA on a national scale. Retailer Liverpool sold May 28 MXP2.25bn in 2020 bonds at 8.53%, or Mbonos plus 128bp, and MXP750m of 2020s in UDIs at 4.22%, or Udibonos plus 92bp. This should indicate the level for AAA corporates. Previously, quasi-sovereign Pemex had reopened markets with a MXP15bn May issue. It sold MXP8.5bn in new 2014 floaters at TIIE plus 44bp, reopened for MXP5bn its 9.1% of 2020 fixed-rate bonds to yield Mbonos plus 113bp, and also placed MXP1.5bn 4.2% of 2020 in UDI-denominated bonds to yield Udibonos plus 80bp.
Category: Regions
Colombia Lifts GDP Forecast
The government of Colombia has revised its GDP growth forecast to 3.0% from 2.5%, still less than the pace Wall Street is predicting. Goldman Sachs still thinks this is a conservative forecast, as it predicts the economy will actually grow by 4.0% in 2010. Morgan Stanley is a bit more bullish, expecting GDP to grow 4.1% in 2010. Colombia’s government also forecasts a 3.6% deficit for the non-financial public sector and a 4.4% fiscal deficit for the central government. Both deficits are 10bp below the targets announced in January. Goldman says it does not rule out that the government ends up over-performing the fiscal deficit target, delivering a lower deficit than expected.
Megacable Buys Smaller Mexico Peer
Mexico telecom Megacable says it is buying smaller peer Omnicable. Although the companies do not disclose a sale price, a Megacable spokeswoman says the buyer will pay 6.5x Ebitda. She also says Megacable will pay cash and that the deal was negotiated in-house. Megacable, she says, is Mexico’s largest cable TV operator in Mexico in terms of the number of subscribers, of which it has more than 1.3m. It also has about half a million subscribers for its internet and digital telephone services. By acquiring Omnicable, which is private, Megacable will add 65,000 subscribers, according to the seller.
PE Upstart Raising Mining Fund
Mexico-based Vander Capital Partners is raising a mining-focused private equity fund that could raise up to $175m. The vehicle is aimed at providing growth capital to smaller miners that have difficulty raising funds. “We are focused on small players that want to be larger. There are a lot of small companies with no access to financing,” says founder Roberto Charvel. The vehicle has raised 35% of its $175m goal, and Charvel expects it to reach 50% by first close, which should be by year-end. The fund is expected to be 80% invested in Mexico and 20% in other markets, mainly Colombia and Peru, Charvel says. Charvel notes that a significant portion of commitments have come from Canadian investors. Vander Capital was founded in 2009.
Mexico Gets WB Loan
The World Bank has approved a $450m loan for Mexico to be used to adapt its water sector to climate change. The facility is a variable interest rate loan based on 6-month Libor, plus a variable margin, with an 18-year maturity period. The opening fee has been fixed at 0.25% of the total sum. The project is expected to end on December 2012.
S&P Chops Axtel Rating
S&P sys it has downgraded the ratings of Mexican telecom Axtel to B+ from BB minus. The outlook is stable. The downgrade reflects Axtel’s weaker-than-expected financial performance during Q1, which was a result of declining revenue in all of its business segments, particularly the international traffic segment, and an expectation of stiffer competition, the agency says. During Q1, revenue declined across all of the company’s segments, with international traffic most affected. This decline caused the company’s Ebitda margin to fall to 29.3% from the 35.2% reported during Q4 2009. Moody’s had already downgraded Axtel in May to B2 from Ba3. It has a negative outlook on the company.
Santander Leans on Brazil
Diversification in Latin America is helping Santander weather the storm in Europe, bank chairman Emilio Botin said at the bank’s AGM Friday. “Our leading positions in 9 main markets – Spain, Portugal, Germany, the UK, Brazil, Mexico, Chile, Argentina and the northeast of the United States – allows us to offset opportunities and risks, without diverging from our business model,” says Botin. He adds that Brazil’s profit accounts for 20% of group operating profit. “This performance is being confirmed in the first half of this year with very positive results, which point toward exceeding the targets we set for the year.” Press reports citing Botin at the event cite a prediction of Brazil making 23% of group profit this year, versus 20% in Spain. Botin says Brazil is, “one of the clear winners from the current international situation.” Overall, Santander expects earnings in 2010 to be similar to those of 2009. “The group’s outlook in the medium term is excellent. This outlook is not currently reflected in the share price, but I am convinced that as the storm in markets calms down, this will be reflected positively,” says Santander CEO, Alfredo Saenz.
Bimbo Ponders Domestic, Overseas DCM
Though it is not in need of funds, Mexican baker Bimbo is keeping both sides of the border open as options for liability management operations this year. “We are taking advantage of our flexibility and making sure we have all of the doors open and be prepared for whichever option we choose,” investor relations director Armando Giner tells LatinFinance, noting that there are no specific plans to issue in either market. Bimbo expanded its domestic debt shelf to MXP20bn earlier this year, and is set to meet US and UK-based investors this week in non-deal presentations. It is on the road through June 22, with Bank of America Merrill Lynch, Barclays and HSBC. Fitch said Friday it assigned a BBB (positive) mark to the food producer, which followed positive outlook moves earlier in the week to the ratings from Moody’s and S&P. Bimbo hit the local markets last year for MXP10bn as part of a plan to reduce leverage following its acquisition of Weston Foods US assets. It has not issued a dollar bond since 1995, according to Dealogic.
Peru Raises Rates Again
Peru has raised its benchmark lending rate for a second straight month to cool inflation amid strong growth. The central bank increased its reference rate by 25bp to 1.75%, in line with forecasts. Bulltick predicts a total of 200bp in tightening this year, with the benchmark policy rate ending at 3.25%. Barclays anticipates Peru ending the year at 3.00%
Findeter Bonds Attract Buyers
Colombian state owned development finance agency Findeter issued COP400bn ($200m) in local bonds, COP100bn more than it initially intended to sell. Total demand soared to COP716bn. The issue was done in 4 tranches. An 18-month tranche for COP75bn pays 1.10% over DTF, a 2-year COP75bn piece pays 1.05% over DTF, a 3-year COP50bn tranche pays 1.22% over DTF and a 5-year COP200bn piece pays 4.03% over IPC. Proceeds will be used to finance lending operations. Findeter managed the sale itself.