Category: Regions

Mexican forestry company Proteak has planted itself on the list of companies planning to raise funds through the certificado de capital de desarollo (CCD) structure. The grower of teak wood used in outdoor furniture and other products requiring weather resistance plans to begin marketing this month a deal which could fetch MXP1.0bn-MXP1.2bn, according to bankers. The 2036 transaction would give investors equity exposure to Proteak and its project to plant more trees in the next year. Proteak is in the same business as AGSA, which pioneered what would become the CCD structure with a MXP1.6bn transaction in 2008. Boutique SAI, which structured the AGSA deal, is also structuring the Proteak deal. HSBC is managing the sale.

Mexico’s Urbi, set to follow its homebuilder compatriots into the dollar debt markets, is readying a $250m 2020 NC5. Investor meetings will be held in Los Angeles and London Monday and Boston and New York Tuesday, according to an investor. Deutsche Bank and Santander are managing the transaction, expected to be rated Ba3/BB. Rival Homex sets a pretty good benchmark, after selling its own $250m 2020 NC5, rated Ba3/BB minus, last month to yield 9.75%. Geo, also Ba3/BB minus, paid 9.00% for a $250m 5-year in September. Urbi’s deal mark its first dollar sale since a $150m 8.50% of 2016 in 2006 via Merrill Lynch and UBS, according to Dealogic.

Mexico’s Grupo Posadas is expected to pull the trigger on a $200m 2015 bond sale this week, and investors are hearing whispers of 9.75% on the B2/B+ rated hotel operator. “It should be more like 10%, but the company is price sensitive,” says a New York-based high yield investor looking at the deal. Posadas is in investor meetings on the deal, which is for refinancing existing debt. JPMorgan is running the sale. Moody’s expects the notes issuance to be neutral to Posadas’ leverage and significantly improve the liquidity position by extending the average life of debt. Posadas and subsidiaries operate 112 hotels in Mexico, Brazil, Argentina, Chile and USA.

The Mexican State of Chiapas has secured MXP2bn in 3-year funds from Banobras at approximately 8% fixed, according to Moody’s, which assigned a provisional Aa1.mx rating. The loan is a direct obligation of the State of Chiapas and payable through a trust managed by Deutsche Bank. The borrower has pledged 25% of its revenue from the earmarked federal fund Fondo de Aportaciones para el Fortalecimiento de las Entidades Federativas (FAFEF), and 13.19% of federal participation transfers, through an irrevocable instruction to the federal treasury. Moody’s calculates that the cashflow available for debt service from FAFEF and participation transfers will result in minimum monthly debt service coverage of 2.2x over the life of the loan. Under a stress scenario, Moody’s calculates that cashflows available for debt service from FAFEF and participation transfers available for debt service will give minimum monthly debt service coverage of 1.9x over the life of the loan. The minimum level of the reserve fund is estimated to provide approximately one month of additional debt service coverage. Moody’s says the expected performance of the loan demonstrates low volatility, owing to the impact of FAFEF flows, a sufficient amount of pledged federal participation transfers and the stable amortization schedule.

The Mexican unit of industrial and commercial real estate developer AMB is preparing an issue of Certificados de Capital de Desarollo (CCD). The transaction for up to MXP3.3bn offers investors a portion of proceeds from revenues linked to planned expansion, according to regulatory documents. The filing says the issuer estimates a 13%-16% IRR for investors. A tenor of at least 8 years is expected, according to a report from Scotia Capital. Banamex and Actinver are managing the sale. No timetable is given, but a banker familiar with the transaction says marketing is getting underway this month, with the deal closing at the end of March at the earliest. CCDs have been slow since their debut last year, as domestic institutional investors take time to study the new asset class that gives private equity-like variable return participation through the sale of tradable securities. Only the first deal from ICA and Goldman Sachs, and a second from Wamex have closed. Transactions from Macquarie, Grupo House and others are waiting. At least a dozen are in various stages of development, bankers say.

Mexico’s Grupo Posadas plans to pull the trigger on a $200m 2015 bond sale, after a “non-deal” road show last month. Investors expect a yield in the 9%-10% range for the B2/B+ rated hotel operator. An exact date has not been set, with the issuer only indicating “this week” to potential buyers. Posadas is planning additional investor meetings this week, according to a banker on the sale, though there is no formal schedule. The issuer is marking proceeds for refinancing existing debt and JPMorgan is running the sale. “Moody’s expects the notes issuance to be neutral to Posadas’ leverage and to significantly improve the company’s liquidity position by extending the average life of its debt structure and largely eliminating debt maturities for the next three years,” the agency says in a report, adding that it expects to lift Posadas’ rating outlook to stable from negative upon completion of the transaction. Posadas last issued dollar bonds in 2005, retapping for $75m an 8.75% of 2011 issue, which it originally did in 2004 for $150m. It bought back $189m of the notes in April 2008, funded by a MXP1.5bn 2013 domestic issue. Posadas and subsidiaries operate 112 hotels in Mexico, Brazil, Argentina, Chile and USA. A deal would offer support bankers’ and investors’ predictions for a Q1 that mirrors Q4 of 2009 in terms of new high-yield issuance.

Spain’s Gas Natural has sold for $1.23bn power generation assets in Mexico to Mitsui and Tokyo Gas. JPMorgan and UBS advised the target, according to Dealogic. Pending approval from Mexican authorities, companies controlled by Mitsui and Tokyo Gas will purchase a 76% participation in the assets through a capital injection to take place at the start of this year and dilute participation by Gas Natural. The buyers also have the right to execute a purchase option on the remaining 24% this year. The seller gets a total of $240m in cash through repayment of debt and shareholders’ contributions. The agreement for the divestment in Mexico includes generation plants Anahuac (Rio Bravo II), Lomas del Real (Rio Bravo III), Vallehermoso (Rio Bravo IV), Electricidad Aguila Altamira and Saltillo, with a total installed generation capacity of 2,233MW, and also the gas pipeline, Gasoducto del Río and the company Compania Mexicana de Gerencia y Operacion. The transaction marks the completion of Gas Natural’s divestment process announced to the market to reduce debt incurred when it acquired Union Fenosa. Gas Natural says it will maintain a presence in Mexico’s energy sector. It claims to be one of the main gas and electricity operators in that market, with an installed capacity of 1,570MW, and another 500MW under construction and expected to come online shortly.