Category: Regions

Mexico’s IDEAL has finally brought the sequel to last year’s jumbo toll road concession securitization, selling MXP2.4bn in 2019 bonds. The Mexican builder and concessionaire controlled by Carlos Slim priced a MXP1.4bn peso-denominated floating-rate tranche at TIIE plus 175bp, and a MXP1bn UDI denominated-piece at 5.33%. The deal – which was filed in July and expected ever since – saw a “healthy oversubscription,” according to a banker managing it, and went mostly to Mexican institutional investors. The bonds have an average life of about 7 years, and will be backed by revenues from the Champa-La Venta, Libramiento de la Ciudad de Toluca, Tijuana-Mexicali and Tepic-Villa Union toll roads. This is the same trust as last year’s deal, which represented an innovation for Mexico in that new roads may be added to it, though none have been yet. Credit Suisse and Inbursa managed the sale, rated AAA on a national scale and part of a MXP50bn program. Last year, in much different market conditions, IDEAL sold MXP7.1bn in bonds, including MXP1.5bn in 2015 notes at TIIE plus 28bp, MXP1.3bn in 2036s at 10.50% fixed, and MXP4.3bn-equivalent in 2036 UDI-denominated bonds at 5.69%.

Controladora Mabe has sold $350m in 2019 bonds, upsized from $300m. The Mexican white goods manufacturer saw about $900m in orders, according to a banker on the deal, and went to about 100 accounts. The bond priced at par with a 7.875% coupon, flat to 7.875% area guidance, and was heard trading level to 0.5 firmer in the gray Wednesday afternoon. “They did well considering the heavy supply this week,” says a DCM banker away from the deal. He notes that being the only Mexican cross-border credit this week helped it stand out, as did scarcity value. The deal is Mabe’s first since a $200m 6.5% of 2015 sold in 2005 through ABN and Citi. Bank of America-Merrill Lynch and HSBC managed this week’s sale. Mabe plans to use proceeds to refinance debt. General Electric owns 48.4% of Mabe, and is also a JV partner for supplying ranges, refrigerators and other products in the US.

A growing band of entities hoping to issue Mexican Certificados de Capital de Desarollo (CCDs) find themselves waiting for investors to understand the new asset class before committing. “The Afores want more due diligence than they do with bonds,” says a banker managing one, adding that roadshows are also taking longer. “We were not quite ready yet,” says an investor at one of the major Afores, who asks not to be identified. He notes that there are a lot of new deals to consider and that Afores are still very conservative, despite credit markets rallying since the crisis and investment rules being relaxed. Issuers are looking to follow ICA and Goldman Sachs’ MXP6.55bn transaction that was done earlier this month to take out Red de Carreteras de Occidente (Farac I) road concession debt, the first issuer under the new structure. Both bankers and investors note that Afores were more familiar with the Farac asset, and toll roads in general, than some of the other projects being pitched under the CCD structure – which allows Mexico’s pension funds to take private equity-like risk through a special type of debt security. Three are still hopeful of getting done before the end of the month, according to bankers managing them. They include Wamex and Macquarie, both through Credit Suisse, and a restaurant chain project from Grupo House, through HSBC. Issuers not as far along, including Marnhos Infraestructura, Tres Marias and Geo Maquinaria, look likely set for November at the soonest, according to bankers managing them. Intermediaries also say that the first movers will get best terms, adding that supply of capital for such projects is fairly limited.

Old news about a potential forced sale of Banamex by Citi recirculated Monday, but the US bank continues to reject the talk. “The Mexican ministry of finance has concluded that we are in compliance with Mexican law and Citigroup’s ownership of Banamex is protected as well by NAFTA,” says a Citi spokeswoman. “In addition, our goal is to repay TARP as soon as possible, and that will put the entire issue to rest,” she adds. Reuters reported last week that Mexican senators are set to ask the supreme court to rule on whether Citi’s local bank is breaking the law by being partly owned by the US government. The wire cites an unnamed senate source. Mexico’s finance ministry ruled in March that foreign governments can own stakes in Mexican banks given the crisis in global financial markets. The status of Banamex had been in question since the US government upped its stake in Citi, prompting speculation of a sale. The US bank was in January rumored to be considering a sale of the Mexico unit to raise cash as the stock price was hammered and some investors feared it was going the way of Lehman. The asset was said at the time to be worth $10bn-$20bn. Last week’s Q3 results showed LatAm securities and banking revenue at $703m, down from $1.05bn in Q2 but up from $469m in Q3 2008. Consumer banking revenue dropped 21% to $1.83bn in Q3 versus Q308, but up slightly versus $1.82bn in Q209.

Mexican chemicals maker Mexichem is preparing to go on the road Wednesday in support of a $350m 10-year bond sale. Investor meetings will be held in the US and Europe, a company official says, with a transaction likely next week. Bank of America-Merrill Lynch has been hired to sole lead the deal, rated Ba1/BBB minus. A Fitch report assigning a BBB minus mark expects that “proceeds from the proposed issuance will be mainly used to complete a potential acquisition which will be integrated into Mexichem’s production chains.” It does not name the target. In the absence of such a transaction, Fitch says, proceeds will likely be used to refinance debt. The company indicates only general corporate purposes on the bond sale. This is the third of a 3-part fundraising, following a MXP2.50bn 2014 domestic bond sale last month, which came after it raised MXP2.25bn from existing investors in August. Proceeds from the first 2 were designated to pay down debt and help fund the acquisition of Plasticos Rex from Cydsa for an undisclosed amount, agreed in April but awaiting regulatory approval.

Moody’s has changed its outlook on Mexico-based America Movil’s A3 rating to positive from stable. This reflects the agency’s view that the regional wireless telecom will continue to be successful at operating in an increasingly competitive environment, and that this will be reflected in its cash generation and liquidity metrics. In addition, Moody’s assigned an A3 rating with a positive outlook to America Movil’s recently issued $750m in global notes due 2019 and guaranteed by Radio Movil Dipsa.