Mexican housing developer Desarolladora Metropolitana (Desmet) is close to putting together a proposal to restructure $260m in unsecured dollar bonds, according to executives involved in the process. Terms have yet to be decided on, but initial discussions appear to have yielded a general consensus that the new deal will involve a “significant” haircut on principal, as well as some equity upside to existing holders that participate in the workout, says an executive close to Desmet. One estimate from a buysider off the trade is that the deal will involve an NPV loss of well over 50%. Investors and bankers involved decline to specify a figure, but suggest the figure is not farfetched. The company’s 2017 10.75% notes, of which there is $200m outstanding, are indicated in the 12-15 cents range. The transaction would involve an exchange for new notes with a different coupon and presumably an extension of final tenor. In 2008, Desmet posted Ebitda of around $5m on revenue of $40m, says an executive close to the homebuilder. Holders have hired Cleary Gottlieb to advise on the restructuring. Heritage Capital Latin America is advising Desmet, while Dewey & LeBoeuf is providing legal counsel. Tudor, the hedge fund, is understood to be a leading holder of the debt, says an investor not involved.
Category: Regions
Mexico Tollroad Package Expected Soon
The Pacific South toll road package, from a series of Mexican concessions known as Farac, should be announced in December or January, says Juan Molinar, Mexico’s secretary of communication and transportation. “There is good reason to think [interest in the Farac packages] will be even better as conditions improve,” Molinar says. He adds that interest is much stronger than even 3-4 months ago, though still less than it was 18 months back. Local bidders including ICA, IDEAL – the respective winners of each of the first 2 concessions – are expected to participate. Molinar says the key to selling the concessions has been to subdivide larger ones into smaller packages, and to redistribute risk by including more equity in financing. Molinar says it is the government’s aim to support legal changes facilitating pension funds’ ability to invest in infrastructure. In September, Afores invested MXP6.55bn in quasi-equity securities linked to Farac I. Duncan Caird, HSBC’s head of project finance for the Americas, says the confidence Afores have shown in Mexican infrastructure is great for the country, but getting investment into some of the newer structures will be challenging. “You need a bit of seasoning. With Farac I, the Afores have seen how it runs, but the new projects have more of an element of uncertainty,” he notes. Molinar and Caird spoke on a Council of the Americas infrastructure panel in New York last week.
BCP Prices in Wilting DCM
Banco de Credito del Peru has sold a $250m subordinated bond, upsizing from a planned $225m on the back of about $1.2bn in demand. The 2069 NC10 priced at par to yield 9.75%. The 60-year junior subordinated security will pay a 9.75% coupon through the first 10 years, and switch to a Libor-based interest rate thereafter. “This is Peru’s top bank, and there’s also a scarcity factor,” says a participating EM investor explaining the demand. Bank of America-Merrill Lynch and JPMorgan managed the sale, rated BB/BB+. The issue is the first with the fixed-to-Libor hybrid structure since Guatemala’s Banco Industrial sold a $30m 9.00% 60-year NC10 bond in April 2008. The deal caps off a challenging week for new issues, which appears set to be followed by a brief break based a lack of announced deals last week. “It was volatile this week, but there were still good outcomes for most issuers,” says a New York DCM banker running transactions this week, noting that pricing might have been a bit better two weeks ago, but things are still rosier than, say, four months ago. “There is a bit of a pause, but I don’t see things shutting down,” says another, noting there is still cash to be spent, although investors will be taking a more cautious approach to new deals.
Best Bank Ecuador: Double the Trouble
The impact of the credit crisis is a theme for all LatAm banking systems, and in Ecuador there is the added question of political volatility.
Best Bank Peru: Quality Counts
The banking race in Peru is a close one, and the global credit crisis appears to have done little to separate the two largest players, BBVA Continental and Banco de Credito del Peru. Backed by its parent¹s powerful network and back-office support, Continental¹s focus on profitability above size has served it well.
Best Bank Bolivia: Still on Top
Banks operating in the smaller LatAm economies have hunkered down during the crisis and the pecking order has remained largely the same as a result. In Bolivia, the dominant bank remains Banco Mercantil Santa Cruz (BMSC).
Best Bank Jamaica: Safe Deposits Haven
Jamaica may have been hard hit by the global recession, but that probably ended up benefitting Scotia’s operations on the tropical island.
Best Bank Colombia: Extending Reach
Despite Colombia’s generally sturdy fundamentals during the financial crisis, its financial institutions have had to swallow their share of bitter cocktails, including isolated corporate derivative losses, toxic Lehman notes, Stanford fallout, and slowing exports to the US. An uptick in unemployment and slower economic growth also boosted defaults at the retail and corporate levels for all banks.
Best Bank Trinidad & Tobago: Bailout Assistant
Not every bank is able to say it benefitted from assisting the government bail out troubled financial entities, but Trinidad & Tobago’s First Citizens Bank can.
Best Bank Panama: Proceed with Caution
Panama’s Banco General has seen its assets and deposits grow and non-performing loans drop slightly in the 12 months to June 2009, despite the global downturn.