Temasek, the Singapore sovereign wealth fund with $127bn in assets, is interested in Mexican infrastructure investment. President Felipe Calderon met Temasek group head Suppiah Dhanabalan last week at APEC annual meetings. “The chairman of Temasek expressed the interest of his group in investing in Mexico, in diverse projects such as the financial sector and ports,” the Mexican government says in a statement.
Category: Regions
Posted inDaily Brief
Peru Signs World Bank Loan
The World Bank has approved a $150m loan for Peru to help the country cover its financing needs, improve the effectiveness of its fiscal management and enhance competitiveness. Terms on the loan include a fixed rate over Libor, a 21-year maturity period and an 8-year grace period.
Posted inDaily Brief
Cemex Kicks off Exchange
Cemex has received regulatory clearance to issue at least MXP3bn in convertible securities to holders of its local bonds, and has launched the offer. Many in the local markets had anticipated a longer approval proceeds and expected a launch as late as early December. Cemex is offering MXP3.0bn-MXP12.5bn in the offer running through December 9, which may be extended at its discretion. 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.
Posted inDaily Brief
Panama Files $2.5bn Debt Shelf
Panama has filed a debt shelf with the SEC to issue up to $2.5bn in debt securities and warrants. It does not give any details regarding a specific offering, but plans to use proceeds for general government purposes, including debt refinancing. Panama has been tipped to take advantage of favorable issuing conditions for sovereigns, particularly after getting a positive outlook on its BB+ rating from S&P this week. In March, Panama reopened its 7.25% of 2015 bonds for $323m through Morgan Stanley and UBS, shortly after filing a $500m shelf in February.
Posted inDaily Brief
BTG Hires for Equity, Eyes Andean
BTG has hired a group of sales people to beef up the LatAm equity effort, as well as a research analyst to lead a push into Andean markets. They include Santander’s former US-based LatAm equity sales head Frederico Monnerat and ex-Itau LatAm equity research sales official Renato Lobo, according to a source familiar with the recruitment. From UBS, BTG poached MD Ashley Farrar, a senior salesperson in New York, and sales trader Jesse Wilcox, as well as Enrique Corredor, who will run ECM syndicate. The team aims to sell LatAm stocks to US-based investors. Santander’s former head of Andean research Alonso Aramburu has also moved over to BTG, according to a person close to the hire. His move – alongside Corredor, who has experience outside Brazil – are understood to be aimed at giving the Brazil-born shop a more pan-regional flavor. Mexico coverage is also understood to be in the pipeline, with hires in that area possible in the next few months. “We went on a pretty serious hiring spree over the last 3 weeks,” says a BTG source.
Posted inDaily Brief
Downturn and Dollar Menace Peru Banks
Moody’s predicts stability in the Peruvian banking system, although it sees risks from a protracted economic downturn that would negatively affect loan growth as well as business volumes, while pushing up delinquencies. It also sees international EM investor risk aversion constraining Peruvian banks’ access to alternative dollar funding needed for growth, and says high dollarization is a latent risk to bank asset quality and earnings. “Given the much lower growth outlook for Peru in 2010 and the increasing trend in delinquencies, we remain vigilant as to the potential impact on bank earnings and capital going forward,” says Moody’s. “The banks’ recent capital and reserve building efforts have positioned the system well to absorb further losses even under a highly stressed scenario,” it adds. The agency notes that business conditions have largely stabilized, allowing banks to continue to be profitable, though less so than last year, but liquid and solvent, and therefore able to manage current and prospective asset quality pressures. It expects 1.7% GDP growth in 2009, down from 10.0% last year, but says banks are well placed to navigate domestic downturn. “Solid balance sheets position them well both to absorb potential losses and to resume loan growth during the next 12 months on the back of healthier economic prospects, as Peru’s GDP is estimated to grow in the range of 3%-5%,” concludes Moody’s.
Posted inDaily Brief
Mexican Funds Seen in Growth Mode
Inflows to Mexican mutual funds are on the upswing after a significant fall in assets under management (AUM) during Q408, according to Moody’s. “It seems that confidence has come back into the markets and investors are returning to funds,” says the agency. “The interest rate picture coupled with conservative credit profiles are attracting assets to Mexican bond funds at increasing rates,” it adds. As of July, Mexican AUM reached $69.6bn (MXP925bn), up 17% versus 2008, says Moody’s, which cites AMIB data. Mexico’s 28-day Cetes rates have decreased about 350bp since the start of 2009, to a low of 4.5%. In Moody’s opinion, this may result in sustained positive flows into funds and increased demand along with a decline in risk perception by investors electing to allocate to higher yielding products of varying degrees of credit quality. The ratings agency adds that as of June 2009, Mexican government securities represented 80% of total Mexican bond funds AUM, compared to 70% in December 2007. Moody’s adds that the Mexican mutual funds market is now the second largest in LatAm behind Brazil, and one of the fastest growing. There are almost 2m Mexican mutual funds investors, in more than 500 fixed income and equity funds. Fund ownership in Mexico is predominantly retail – constituting more than 90% of the total mutual fund investor base – but institutional shareholders comprise a growing percentage of assets, says Moody’s.
Posted inDaily Brief
CIE Targets MXP5bn Debt Extension
Mexican entertainment company CIE is hoping to extend over MXP5bn worth of near term local debt maturities in the coming weeks. On November 18 the company will meet with local investors that hold three classes of certificados bursatiles – a MXP500m tranche that matures in December 2009, a MXP650m one due in April 2010 and MXP1.4bn that comes due October 2010. CIE will propose migrating all 3 classes, which carry spreads over TIIE of 170bp-240bp, onto a single new maturity schedule that begins amortizations in 2011 and a final maturity of 2014, with an average life of above 3.5 years, according to an IR official. The new facility would offer TIIE plus 300bp. CIE is also in the process of rolling over up to MXP2.7bn in local bank debt onto a very similar maturity schedule with the same amortizations, also paying TIIE plus 300bp. CIE’s largest bank creditors are Banamex and Inbursa, adds the IR executive. CIE has been hit hard by Mexico’s economic slump and swine flu-related slowdown. In the past 3 weeks its rating has been lowered by both Moody’s and S&P. Moody’s has the credit at Caa1 on review for further downgrade and S&P has cut it to CC, also with negative outlook.
Posted inDaily Brief
Telmex International Reloads Local Program
Telmex International has registered to sell up to MXP5bn in local bonds, soon after selling MXP5bn in September. The entity spun off last year from Mexico’s Telmex is targeting November 26 for the sale of 2014 notes paying interest at a spread over TIIE, according to regulatory documents. Inbursa is named as bookrunner, though another Telmex relationship bank – such as Bancomer, Banamex or HSBC – is usually added closer to launch date for the Mexican telecom. Proceeds are marked for general corporate purposes, including repaying debt. Telmex International got an interest rate of TIIE plus 135bp on MXP5bn in 2012 bonds at the beginning of September.
Posted inDaily Brief
Urbi Breaches Local Covenant
Mexico’s Urbi has breached a leverage covenant on MXP1.06bn in local bonds and convened a bondholder meeting for November 20. Moody’s cut the national scale senior unsecured debt rating to Baa1.mx from A3.mx and keeps it on review for possible downgrade. The Ba3 global scale senior unsecured debt rating was also put on downgrade review. The company was required to keep its ratio of debt to earnings before interest (excluding capitalized interest), taxes, depreciation and amortization (including deferred financing fees) below 2x. “Urbi has 40 days to cure this breach, and thus the bondholders have not declared a default. The company expects to either change or waive debt covenants,” says Moody’s. Urbi is a publicly traded, integrated homebuilder engaged in development, construction, marketing and sale of affordable housing in Mexico. The firm reported assets of approximately MXP33bn and equity of approximately MXP16.5bn September 30. “The basis of our business strategy is prudence and a higher liquidity position for the company, which is backed with a track record of profitable and consistent operational performance,” says Urbi CFO Selene Avalos. “We have versatile funding options, which reflect a gradual improvement of the financial market conditions,” she adds.