Category: Regions

Mexican mining giant Grupo Mexico is looking to raise a $1.4bn loan facility, with proceeds understood to be destined to help finance a bid to take US subsidiary Asarco out of bankruptcy. The financing is heard launching as early as today and a 2 tranche facility with 3 and 5-year maturities is being considered, say people away from the deal. Pricing will be on a ratings grid and while a rating has not yet been secured, a banker off the deal says Grupo Mexico is targeting BBB minus. With that grade, the shorter tenor is expected to be priced at below 400bp over Libor, with the longer end exceeding 400bp. BBVA, Calyon, Credit Suisse and Inbursa are among the lead banks on the proposed facility. The quartet has apparently signed a commitment letter for the $1.4bn and several other institutions are heard to have been approached for the deal, which is expected to be syndicated. A US bankruptcy court judge ruled last month that Grupo Mexico’s plan to take Asarco out of bankruptcy protection offers creditors the best chance to recover what they are owed but the final decision rests with a US district court judge, Reuters reports. A final ruling on the case is expected by the end of November and negative outcome would derail the facility. Asarco has this year been the subject of a bidding war between Sterlite, a unit of India’s Vedanta, and Grupo Mexico. The $1.4bn loan Grupo Mexico is targeting is presumably destined for debt paydown after paying Asarco creditors.

S&P has cut Mexican entertainment promoter CIE to CC with a negative outlook from CCC+ amid continued concern about liquidity and financial performance. “The CC rating reflects our expectation that the company will propose a debt refinancing plan to its domestic bondholders that will probably be considered as a distressed debt exchange under our criteria, given the issuer’s very tight liquidity position as of third-quarter 2009,” says S&P credit analyst Fabiola Ortiz. The agency says that even though CIE wants to avoid principal haircuts, an extension of debt maturities will likely mean that investors will receive less than the promised value of original securities. CIE has $200m in senior unsecured notes due in 2015, with a recovery rating of 4, indicating that lenders can expect an average (30%-50%) recovery in the event of default. Outstanding debt was $13.65m as of September 30.

Cementos Apasco, Hoclim’s Mexican unit, is planning to issue approximately MXP1bn in a domestic market ABS. The terms of the issue have not been set, explains a banker managing the sale, but the issuer is looking at a 4-year floating rate on a bond backed by trade receivables. HSBC is managing the sale, expected in December, and rated AAA on a national scale.

Cemex is preparing to offer domestic bondholders new convertible bonds in exchange for the notes they hold. The deal, expected by Cemex to be worth MXP3bn, should be launched around the first week of December, according to bankers managing it. The new 10% coupon 10-year bonds will be mandatorily convertible into certificados de participacion ordinaria (CPO) similar to those sold internationally in September to raise $1.63bn. Conversion is forced at maturity, in the event of a default, or at Cemex’s discretion if the price reaches a certain threshold – roughly equivalent to a 50% gain. Holders may also voluntarily convert after 1 year. The conversion price is determined by multiplying the volume-weighted average price of the CPO for the previous 10 trading days by a conversion rate of 1.62-1.65. Banamex, BBVA, HSBC and Santander are managing the process. The offer period will last 20 days following launch. The exchange comes as a part of the Mexican cement maker’s plan to restore financial health following the credit crisis. It follows a $15bn bank debt restructuring in August and an equity raise in September. A dollar bond is also a possibility. Cemex is rated B internationally, and BB+/BB minus on a national scale.

Telmex has been lured back in to the dollar market for $500m in tightly priced 2019 bonds. The Mexican phone operator’s first dollar issue since 2005 benefited from scarcity value, investors say, despite the fact that it looks less attractive versus comps like America Movil and others more diversified into wireless. The A3/BBB+ deal came at 99.733 with a 5.500% coupon to yield 5.535%, or UST plus 200bp, in line with 200bp area guidance. The book was $1.5bn, according to bankers on the transaction. “It came a little tight, but they have very little out there,” notes a participating EM investor. It was heard trading up 0.25-0.50 points Thursday afternoon. America Movil, the closest comp, was heard trading at 180bp prior to the Telmex announcement, according to Barclays. An investor says Telefonica was trading in the 170bp area and Telecom Italia at 220bp-230bp. “We view Telmex as a solid credit, but given the continued decline in its traditional business, lack of geographic diversity, regulatory hurdles, potential for new foreign competition, and uncertainty about when or if the company will receive a TV concession, we believe it should trade at a discount to America Movil,” Barclays says, noting that it sees “little potential upside” in the new 2019s. America Movil sold its 2019s in early October with a 5.000% coupon to yield 5.105%. Bankers on the deal note a bit of widening out in high-grade since the America Movil sale, but spot it at 185bp and pin most of the difference on a new issue premium. Bank of America-Merrill Lynch and HSBC managed the transaction, whose proceeds are for general corporate purposes. Telmex has mostly been funding itself through the Mexican local markets, with its last international foray being a $450m 2010 and 2015 offering in 2005 and a MXP4.5bn global peso 2016 bond in 2006.