Category: Regions

Mexican media company TV Azteca is preparing to sell $40m in 1-year dollar bonds linked to the MXP, according to investors, who say yield guidance is 8.75%-9.00%. The 8.25%-coupon note will pay interest and principal adjusted to the central bank’s interest rate at the time each payment is due. Proceeds will be used for general corporate purposes. BCP Securities is managing the sale, which is not rated.

Fitch has lowered Mexico’s sovereign debt rating to BBB from BBB+ in a move analysts say has largely been priced in by the markets. “The global economic and financial crisis and falling oil production have accentuated weaknesses in the sovereign’s fiscal profile, including the high oil dependence of public sector revenues, a narrow non-oil tax base and a limited fiscal cushion,” the agency says. These factors limit Mexico’s ability to cope with future shocks, it adds. The recent tax reform measures were a positive development, but not enough, \ as oil will likely still account for over 30% of total government revenues, observes Fitch. “The hype around the news [of the downgrade] far exceeded the [market] reaction. Mexico trades like a BBB country and has done so since the beginning of the year,” RBS says in a report. JPMorgan agrees, though it adds that a downgrade from S&P is not priced in at all. The shop does not believe S&P will lower Mexico any time soon. S&P rates Mexico BBB+ with a negative outlook.

Mexico’s Grupo Televisa has sold $600m in 2040 bonds to become the first Mexican corporate to issue at the long end of the curve this year. The media company upsized from an initially announced $400m on the back of some $1.7bn in demand. The issuer known for its penchant for long-dated debt priced the Baa1/BBB+ deal at 98.319 with a 6.625% coupon to yield 6.755%, or UST plus 245bp. The yield came inside of the UST plus 250bp-area guidance, which followed whispers of 250bp-260bp. Some buysiders say they felt squeezed by the spread tightening. “This priced with very little concession to the curve,” says a New York-based EM investor looking at the transaction. However, the bond tightened 2bp-4bp on the bid side in the aftermarket, according to investors. Proceeds are for general corporate purposes. A banker managing the deal notes the issuer has a comfortable cash position and is taking advantage of opportunistic market conditions. Credit Suisse managed the sale. Televisa was the second pure LatAm corporate to go long this year, following Vale’s $1bn 2039 offer in September. Its previous bonds include a 6% 10-year sold in May 2008, a 30-year Europeso issue done in 2007, a 20-year dollar bond in 2005, and a 30-year dollar bond in 2002, according to Dealogic.

Mexico’s Embotelladoras Arca is planning a local bond, and aims to sell up to MXP3bn in fixed and floating rate notes, according to an S&P report assigning a AAA rating on a national scale. The tenor should be up to 7 years, S&P says, and proceeds should be used for refinancing debt. A banker on the deal says the bottler would like to price by mid-December. HSBC is managing the sale. In June, Arca sold MXP1.5bn in domestic bonds, including MXP1bn in 2012 notes at TIIE plus 100bp, and MXP500m in 2016s at a fixed 9.75% rate.