Category: Regions

Mexico’s government is set to open bids today for the Northeast toll road package, the next in the line of the group popularly known as Farac. Seven bidders are said to be in the hunt for the 30-year concession, including locals Ideal and ICA, and notable foreigners such as Brazil’s CCR and Spain’s OHL. The package includes two roads and three bridges in the states of Nuevo Leon and Tamaulipas. An official estimate of the package’s value has not been given, though it is thought to be worth at least $300m-equivelant. The Northeast package, the Mitla-Tehuantepec package, the Lerma Tres Marías cluster, the Pacific South and the Chihuahua and Valles-Tamuín beltways projects on offer this year are estimated to require a total investment of around MXP10bn.

GMAC Mexicana has completed investor meetings for a MXP1.45bn auto-loan securitization, and is preparing to price later this month. The 2015 bond is backed by a pool of 15,221 auto loans totaling MXP1.9bn with an average life of 1.3 years. The sale is expected March 24, according to a report from Scotia Capital, and is the first pure securitization of auto loans in Mexico, according to officials managing the deal. Banamex and HSBC are managing the sale, expected to be rated AAA on a national scale. The offer will also include a MXP245m subordinated piece, rated A, that GMAC plans to hold on to.

LatAm’s 2 biggest exchanges will soon be connected through a single trading platform, thanks to a deal by the Chicago based-CME Group to bring Mexico’s Bolsa onto its Globex system. With Brazil’s BM&FBovespa already plugged into Globex, which stretches across 85 countries and boasts 120,000 active users, and the Mexican exchange soon to come online thanks to a deal announced Monday, a new intra-regional flow between LatAm’s liquidity centers will be established. Bryan Durkin, COO of CME, tells LatinFinance the focus of the new efforts has been to foster interconnectivity with all of its clients, but notes the linkup does provide an unprecedented link between Brazilian and Mexican investors. “A number of investors in Brazil have expressed strong interest in Mexico,” says Durkin. CME Group has agreed to purchase a 1.9% stake in Mexico’s stock exchange, the BMV, for $17m. The agreement is similar to a 2008 deal between CME and the BM&FBovespa that involves mutual order routing into and out of both exchanges, as well as an asset swap with commensurate board participation by the CME on the local exchanges. The deal also includes Mexico’s derivatives exchange MesDer.

While GEM equity funds posted modest outflows on the week ended March 3, LatAm enjoyed inflows, with Mexico equity funds hitting a 19-week high, according to EPFR Global. Performance was also positive for LatAm equity in the week ended March 4, with Lipper data showing an improvement of 4.34%. However, year-to-date they are still losing 3.62%. EM funds gained 4.14% in the week and are down 1.71% ytd while global small and mid-cap funds have risen 2.86% in the week and 0.45% ytd.

Private equity firm Nexxus Capital has closed a certificado de capital de desarrollo (CCD) transaction in Mexico’s local market, the largest to date from a private equity fund. The 2020 deal priced at MXP100 and raises MXP1.46bn for Nexxus’ fourth private equity fund, which invests in a wide variety of assets in Mexico over a 5-year period. Through the transaction, investors get 80% of the fund’s proceeds and Nexxus receives 20%, as long as the CCD buyers’ initial investment plus a 10% preferred return is met. The CCD was bought by 11 different Afores, private pension funds and family offices. Proceeds are for a fund following Nexxus’ normal guidelines – purchases of stakes worth $25-$45m in mid-sized companies with growth potential tied to Mexicans’ increasing purchasing power. No single transaction can be worth more than 20% of the fund. BofA-Merrill Lynch, Santander, and Ixe managed the transaction. Nexxus founding partner Luis Harvey tells LatinFinance there should also be an equal amount raised in via traditional channels for a fifth fund that co-invests with a fourth, drawing largely from investors in Nexxus’ previous vehicles. He says the CCD transaction took about 11 months from start to finish, compared to 18 months years for its previous private equity funds. “There was a learning curve for the executives at the Afores, and they are quick learners. Our expectation is that next time the process will be faster, but by how much I don’t know,” Harvey says. Among the most important factors speeding up the process for Nexxus was track record, he adds. The group’s second fund still holds $180m in Genomma Labs stock. It expects to close in April the sale of another business, Sports World, for $60m. Close to 30 CCDs remain in the Mexican domestic pipeline, though many are advancing at a sluggish pace, with institutional investors analyzing the new structures carefully. Those tied to private equity and infrastructure seem to be gaining most traction. Nexxus is the f

Mexican bankers are heard pitching cash-rich Bimbo a liability management transaction, which could happen this year. “I feel there will be opportunities in the markets,” Bimbo CFO Guillermo Quiroz tells LatinFinance. “Maybe we’ll do something to increase the duration,” he adds. Bimbo’s debt has an average life of 3.2 years and is 50-50 MXP/USD, more or less in line with earnings. The company has $300m due in 2010 and no major amortizations the following year. There is a $1bn total looming in 2012. Following the late 2008 acquisition of Weston Foods assets in the US, which pushed leverage above 4.0x debt:Ebitda, Bimbo aims to get leverage down to 2.0x this year. It was roughly 2.5x in February.

Mexico has seized advantage of improving risk appetite to retap its 5.125% of 2020 for $1bn at a yield it claims as the lowest ever for a 10-year. Demand was about $2.5bn, slightly stronger than the $2.0bn it drew in the original January $1bn offer. The Baa1/BBB issue reopened at 100.956 to yield 5.000%, or US Treasuries plus 139bp, in line with 140bp-area guidance. Investors and bankers on and away from the deal spot the reopening premium at around 12bp, based on the bonds trading at UST plus 125bp-130bp at close Wednesday. “A window started to open in the past few days, which gave us a financing opportunity at the lowest absolute yield that we’ve been able to achieve with a new 10 year transaction,” Gerardo Rodriguez, Mexico’s head of public credit, tells LatinFinance. “This was a compelling opportunity for us to advance our funding strategy, strengthen the benchmark status of the bond, and with that be in a much more comfortable position having done two–thirds of the amount we will need for the year,” he adds. Rodriguez says Mexico was also motivated by general positive feedback from investors. The deal was said by buysiders to have been driven by reverse inquiry, with the sovereign electing to announce at $1bn “will not grow,” rather than a smaller chunk open for growth, as might be expected on a retap. “There is a better feeling in the market overall, and about Mexico,” says Edwin Gutierrez, who helps manage $5bn in EM debt at Aberdeen Asset Management. He says different sectors in the Mexican economy point to a strong cyclical rebound, and that risk aversion stemming from the Greek debt crisis is becoming more of a non-story for LatAm debt issuers. JPMorgan and Morgan Stanley managed the transaction. The bond was originally sold January 11 at 99.037 to yield 5.250%, or UST plus 142.4bp. On that deal, the new issue premium was seen as less than 8bp. BofA-Merrill Lynch and Citi managed the January deal. Bankers away from the trade are optimistic that if it trade