Mexican cement maker Cemex plans to offer $500m in 2015 convertible notes due 2015. The deal, a part of its continuing bid to restructure debt and return to blue-chip status, may also feature a $75m overallotment. The notes, which will be unsecured and subordinate to existing and future senior debt, are convertible into Cemex ADS at a conversion rate to be determined at the time of pricing. It does not give an indication of timing, or who would manage the sale. In December, it sold MXP4.1bn in domestic bonds convertible into its CPO shares, to fund the repurchase of MXP4.1bn in various local bonds. Cemex also last year renegotiated $15bn in bank debt, made a major asset sale and raised $1.8bn in equity. It then sold $1.25bn in 2016 bonds in December, reopening the issue for another $500m in January, and EUR350m in bonds in December.
Category: Regions
CFE Bags Japanese Credit Line
Mexico’s state-owned Comision Federal de Electricidad (CFE) has obtained $273m in a 10-year credit line from Tokyo Mitsubishi, Sumitomo and JBIC, Japan’s export-import bank. CFE says it will also issue $338m in MXP-denominated certificados bursatiles in a few days. The $611m in funds will be used to pay for the CCE Pacifico coal-fired plant, which will have a generating capacity of 650MW. Mitsubishi is developing the CCE Pacifico project, which is set to be completed this year.
Mexican Paper Group Readies Bond Debut
Mexico’s Grupo Papelero Scribe will begin a roadshow tomorrow in support of a new high-yield dollar bond, its first under the company’s present structure. The manufacturer of paper products plans to enter a market that has been receptive to Mexican high yield, with a $250m 10-year NC5. Scribe is set to visit investors Wednesday in London, Thursday in New York, Friday in Boston, and Monday on the US west coast. Credit Suisse is sole bookrunner and Morgan Stanley is co-manager. The 144a/Reg S bond is rated Ba3/BB minus.
Mexico Eyes Asia, Europe
Mexico is considering issuing in yen and/or euros to wrap up this year’s financing plan. “We’re looking at how things develop in Japan, potentially to go back there,” Mexico’s head of public credit Gerardo Rodriguez tells LatinFinance. UMS has $1bn left to raise in 2010. While Mexico would prefer to issue unguaranteed in the yen market, Rodriguez says the Japanese market is not quite there yet. Nonetheless, a yen deal is possible for Mexico by the end of the year. He adds that the European market also looks attractive. Since the success last week of Vale in euros and sovereigns earlier in the year with yen, bankers have been eagerly pitching the currency to clients. Issuers and bankers in Cancun for the IDB say both are a viable option, but much will depend on pricing versus other options like dollars.
Guatemala Plans $500m Bond Return
With funding costs at attractive lows and an infrastructure pipeline to develop, Guatemala is considering its first dollar bond since 2004, finance minister Juan Alberto Fuentes tells LatinFinance. “We are evaluating possibilities. This year would be ideal and Guatemala is capable,” the official says. Congress should approve soon a plan allowing the government to issue $500m in the international markets, he says. A tenor has not been decided, though 10 years would be a likely possibility. Bankers in Cancun for the IDB meetings say that the Central American issuer is a good candidate to tap and there are plenty of shops pitching. Fuentes says proceeds of the sale would help fund infrastructure investments the government has planned including roads, ports and airports. The sovereign, rated BB+/Ba2/BB, does not have maturities to refinance until 2011. It also has good access to multilateral lines. Fuentes highlights the fact that Guatemala was one of the few economies in the region to grow in 2009. It expanded by 0.6%, owed to a reliance more on food exports as opposed to durable goods shipments. He expects 2% expansion in the economy this year. An improving picture in the US would also help remittances boost the economy. While conditions in the US have improved since last year, Fuentes does not see unemployment falling significantly in the short term.
Mexico Keeps Benchmark Rate at 4.5%
As was widely expected, Mexico’s central bank has left its monetary policy rate at 4.5%. The bank says that although the Mexican economy continues to recuperate faster than expected, activity –including private investment, consumption and employment rates– is still below potential. Barclays thinks Banxico’s hawkishness will increase gradually in the coming months as the recovery unfolds. It continues to expect a first rate hike in August. Morgan Stanley predicts the rate will stay on hold until the end of 2010.
BAML Appoints Mexico I-Bank Head
Emilio Mahuad, head of Mexico principal investments at Bank of America-Merrill Lynch (BAML), is being named head of investment banking for the country, according to people close to the matter. He is replacing Laurent Massart, who will remain at the firm, assuming a role in the M&A department. Neither executive was available for comment. The move is understood to be close to being announced internally. Separately, BAML has hired Alberto Ades as co-head of fixed income strategy and economics. Ades, who in June will join co-head Daniel Tenengauzer, comes from Citi, where he was head of LatAm economics and market analysis for the past 5 years. Prior to Citi, he spent 11 years at Goldman Sachs. Ades and Tenengauzer will report to Michael Maras, head of global credit research and Adam Quinton, head of global macro research. BAML also recently added LatAm credit analyst Anne Milne from Deutsche Bank, who will be global head of EM corporate research after a 3-month gardening leave.
CFE Sets Local Jumbo Placement
Mexico’s CFE has indicated March 24 as the price date for its domestic bond issue of up to MXP5bn, according to regulatory documents. The 10-year fixed and floating-rate issue is rated AAA on a national scale and managed by Banamex and Santander. The state-owned utility is also readying a MXP500m 3.5-year floating rate transaction through Ixe, expected in early April. A successful pricing is expected to help reanimate a local debt capital market long starved of supply.
MBIA Unit Files CCD
LatAm Capital Advisors, a subsidiary of MBIA, has filed to raise funds for an infrastructure investment vehicle in Mexico’s CCD market. The Administradora de Fondos de Infraestructura en Mexico vehicle plans to make investments of up to 30 years in different infrastructure areas in Mexico, over a 10-year period. The expected size of the transaction – generally a moving target throughout the long period of analysis and negotiation typical of CCD deals – has not been indicated. State-backed bank Banobras may buy up to 20% of the transaction, according to regulatory documents. It did the same in Macquarie’s MXP3.4bn CCD based infrastructure fund sold in December, the only such trade to close thus far. Banamex is managing the transaction.
Mexico Tees Up 2040 Udi Sale
Mexico is preparing to syndicate a 30-year Udibono early this week. A MXP10bn-MXP15bn size is planned for the 4% coupon bond, with the high end of the volume range looking most likely, Mexico’s head of public credit Gerardo Rodriguez tells LatinFinance. “We’re seeing a healthy demand,” says the official. The existing 2035 Udibono is the benchmark, with a 25bp pickup likely for duration, he adds. Mexico hopes to raise foreign participation in local issues through the sale. Udis typically get less than 5% overseas investor interest, versus around 25% for bonos. “Inflation indexed securities are becoming more popular in the world and people are looking at ways of expressing that view,” says Rodriguez. Bookbuilding will start early this week, including the release of official guidance. The local syndication marks the second such transaction, following last month’s MXP25bn sale of 2020 bonds. The new system aims to establish large benchmark bonds instantly, instead of through several periodic smaller sales. The aim is also to broaden the investor base and make the new securities index-eligible. The same group of banks will be involved in this week’s deal, though with different roles. Banamex, HSBC, ING, and Bank of America-Merrill Lynch will manage the deal, with Santander, BBVA Bancomer and JPMorgan as co-managers. The government has also said it plans to issue a 5-year bond using the same process later in the year.