The Mexican arm of HSBC has received MXP6.29bn through a capital increase by its UK parent company. The issue of 263m shares includes 244m F series and 20m B units at MXP23.86 each. In a local filing, HSBC Mexico SA says the additional capital provided by Grupo Financiero HSBC shows its “confidence and commitment to the company and Mexico’s financial sector.”
Category: Regions
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Autlan Places $40m 5-Year
Mexican mining company Compania Minera Autlan has sold $40m in 5-year bonds at 9.5% to refinance debt. The notes have 18 months’ grace and are backed by exports and inventory. “This transaction is aligned with the company’s financial strategy of maintaining low leverage and diversifying funding sources,” the borrower says. Autlan says a portion of proceeds will be used to prepay debt and close derivatives positions, while the remainder could be invested in new projects. Credit Suisse was the lead.
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Famsa Brings Small CP
Mexican retailer Grupo Famsa has priced a $27m 1-year deal at par to yield 8%. The issuer was heard looking for $50m in the Reg S only CP, but apparently fell short owing to a year-end lull in investor interest. “There is less liquidity and there is less enthusiasm,” says a DCM banker not on the deal, speaking of buyside appetite for LatAm credit generally. The deal through Jefferies was is unrated, listed in Luxembourg and governed by New York law. Proceeds are for general corporate purposes. Famsa was last in the market late October with a $44m euroclearable 1-year CP issue also priced to yield 8%. Proceeds were being used to help finance retail purchases of white goods by customers. That issue was led by US-based broker Atlas One, which acted as placement agent.
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Posadas Rating Risk Eases
S&P has removed the negative watch on the B+ rating of Grupo Posadas, the largest hotel operator in Mexico, but says the issuer faces important maturities in 2010 that could tighten its liquidity position. “The corporate credit rating on Posadas reflects its aggressive financial policy, the cyclical nature of the lodging industry, the company’s geographic concentration in Mexico, and its relatively high debt leverage,” says S&P analyst Monica Ponce. These factors are partially offset by the company’s consistent operating performance, its position as the largest hotel operator in Mexico, and its diversified hotel portfolio, including well-recognized brands, she adds.
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Colombia Keeps Rates on Hold
As expected by the market, Colombia’s central bank kept its monetary policy rate unchanged at 3.5% Friday, saying that sticking at this level will help to stimulate economic growth. The bank also says it took into account the downward trend in inflation, which as of November was 2.4% on an annual basis. In November 2008, annual inflation stood at around 8.0%. As a result of the drop in inflation, the bank has revised its inflation target. While the target for 2009 was between 4.5% and 5.5%, in 2010 it has been reduced to 2.0%-4.0%. In 2010, economists see the central bank tightening. Morgan Stanley expects the central bank to hike interest rates by 200bp to 5.5% in 2010. Bank of America Merrill Lynch sees a long pause at the 3.5% level until Q2 2010. “Cutting rates to curb COP strength, setting new inflation targets and conducting monetary expansion through the purchase of up to COP3.00tn ($1.6bn) of USD and TES bonds leads us to conclude that an earlier hike is possible only if activity and inflation turn upward,” it says.
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Jamaica Closes on IMF Pact
The IMF says it has reached an agreement with Jamaican authorities on key elements of a program that the IMF would support with a 27-month $1.3bn loan under a stand-by arrangement (SBA). The bank adds that its executive board will consider Jamaica’s SBA early in 2010. The program, says the IMF, will involve a mixture of controls on public sector salaries; some tax increases, as well as cuts in other spending. “On the margin, this is positive news for the credit, as this SBA is to catalyze significant additional financing from multilaterals, which have a relatively low portfolio in Jamaica,” says RBS. It adds that at end of FY 2008/09, multilateral debt amounted to only 10% of Jamaica’s public sector debt. Meanwhile, the Jamaican government seems to be moving to comply with IMF requisites. The finance ministry has announced a tax package amounting to JMD21.8bn, or 2% of GDP, which includes an increase of the general consumption tax to 17.5% from 16.5%, raising the special consumption tax on fuel and cigarettes, and upping the electricity rate on usage exceeding 200KWH per month. The ministry also announced a freeze of government wages for the next 2 years.
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Eton Park Takes Independencia Stake
Financiera Independencia, a Mexican microfinance lender to lower income individuals, has agreed to sell 70m shares at MXP10 each to US hedge fund Eton Park. The transaction follows last week’s approval of an 85m share capital increase. Proceeds will be used to fund the MXP530m acquisition of Mexico’s Financiera Finsol. The buyer says the target is the second largest microfinance institution in Mexico, and that the deal also includes Finsol Brazil. “Proceeds will also be used to provide up to MXP300m of capital to strengthen the balance sheets of the companies to be acquired,” says Financiera Independencia. Eton Park will have the right for 5 years to subscribe for an additional 45m shares, including 25m at MXP14 and 20m at MXP13.50. In order to have the stock available, Independencia will propose a capital increase resulting in treasury stock of 45m shares at its annual meeting, due to be held by April. If Eton Park exercises its right to subscribe for the additional shares, Independencia will receive MXP620m, earmarked for future potential consolidation opportunities. Credit Suisse acted as placement agent in connection with the transaction. Eton Park manages over $12bn in assets. As of September 30, Independencia had a total outstanding loan balance of MXP4.8bn.
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Mexico Awards Water Treatment Contract
Mexico has awarded a MXP9.4bn 25-year contract to build its biggest water treatment plant to a group led by IDEAL. The consortium will pay 51.66% of the cost, with the balance coming from the Fonadin national infrastructure fund. The plant, which will be located in the town of Atotonilco in Hidalgo state, will increase to nearly 60% from 6% the treatment of sewage waters produced by the Mexico City metropolitan area, says national water commission Conagua. IDEAL unit Promotora del Desarrollo de America Latina joins Controladora de Operaciones de Infraestructura, Atletec, Acciona Agua, Desarrollo y Construcciones Urbanas and Green Gas Pioneer Crossing Energy in the winning group.
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Freeze on Colombia Rates Expected
Market consensus points to Colombia’s central bank keeping its monetary policy rate intact at 3.50% today, although many see a hike coming in 2010. Bank of America Merrill Lynch sees a pause until Q2 2010. “Cutting rates to curb COP strength, setting new inflation targets and conducting monetary expansion through the purchase of up to COP3.00tn ($1.56bn) of USD and TES bonds leads us to conclude that an earlier hike is possible only if activity and inflation turn upward,” it says. Morgan Stanley expects the central bank to hike interest rates by 200bp to 5.5% in 2010, and forecasts that domestic recovery and an improvement in global markets will have more influence on rates than restrictions on trade imposed by Venezuela. Colombia-based research firm Corredores Asociados, meanwhile, says there is a chance for the central bank to cut the rate today if industrial production and retail sales deteriorate by a higher rate than the expected 3.0% and 4.3%, respectively.
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Panama Fund Botches Bond Attempt
Panama has pulled a sale of up to $759.7m in existing global bonds held in a development fund, reversing course due to low bids. The government-backed Fondo Fiduciario para el Desarrollo announced Thursday morning it would sell 3 series of sovereign bonds through an auction, before cancelling the transaction in the early afternoon, according to investors. “This is likely to introduce a supply-risk premium on Panama’s curve,” Boris Segura, economist at RBS, tells LatinFinance, even though it didn’t go through with the sale. He adds that the low bids received were a reflection of the unusual nature of the transaction, as the fund had never sold the government debt it holds in such a large amount. The late December timing did not help. Segura estimates the fund – created in the 1990s with proceeds from various privatizations – has about $1.25bn, some 90% of which is sovereign debt. The fund was set to offer up to $345.9m in 6.7% of 2036 bonds, up to $62.2m in 8.125% of 2034s and up to $351.7m in 8.875% of 2027s. The bonds dropped in price on announcement of the deal, according to a trader, with the 2036 losing as much as 5 points, and finishing around 104.5. Bids for the 2036s were heard coming in at 103-104. Citi was managing the sale, and declines to comment. Panama claims to have seen almost $600m in demand for the deal. “The seller thanks the investment community for its interest and participation in the auction process,” it adds. Panama was widely lambasted for a poorly timed March reopening, which according to bankers, left money on the table.