Category: Regions

Mexican homebuilder Javer says it has hedged proceeds from its $180m 5-year bond placed at the end of July. Announcing H1 results, Javer says that 100% of the coupons have been hedged at an exchange rate of MXP13.23/USD. Half was swapped into variable MXP at an average rate of around TIIE+435bp, while the rest was fixed at an average in MXP of around 14.23%, says the borrower. “As of today 50% of the principal amount of the notes has also been hedged with one year forward contracts that were entered into at spot rates of between MXP12.86 and MXP13.16 per US dollar plus the appropriate forward points,” says Javer. The company adds that it plans to roll these forward until the maturity date of the notes. The hedging was executed via 6 counterparties, says Javer, without naming them. “Through these counterparties we have exposure thresholds in excess of $32m to cover potential negative mark-to-market exposures in the derivative portfolio,” says the issuer. The privately held builder of entry-level and middle-income housing priced the 2014 bond issue at par to yield 13%, in line with 13% area guidance. Bank of America-Merrill Lynch and Credit Suisse underwrote the first-time Ba3/BB minus deal. Javer adds that as of June 30, it maintained derivatives positions to hedge 100% of its currency exposure and part of the TIIE exposure related to a syndicated loan. The $55m facility was hedged through a cross-currency swap held through 2 financial institutions at an exchange rate of MXP10.427. A MXP154m tranche, was hedged for interest rate exposure through an interest rate swap at a fixed 12.77%.

Grupo Mexico has again increased its bid for bankrupt Asarco, this time to $2.2bn in cash, from a previous $2.0bn. The move comes after rival bidder Sterlite Industries, a unit of India’s Vedanta Resources, improved its offer for the target to almost $1.7bn from $1.1bn on August 12. Vedanta is offering $1.6bn in cash and a $208m copper price participation note.

Market consensus indicates that Mexico’s GDP will have contracted 10.8% in Q2 2009, after falling 21.5% in the first quarter because of drop in industrial activity. The industrial sector is expected to post an 11.6% drop in Q2, a larger drop than the 9.9% contraction posted in Q1. The outlook for the retail sector is not good either, says Citi, which forecasts a 7.2% contraction year-over-year. Market consensus points to a 7.5% drop in retail sales for 2009.

Aureos Capital has raised $184m at the final close of its LatAm fund, which invests in small and medium sized businesses in Mexico, CentAm and the Andean region. About half of the funds are expected to go to Mexico, with the remainder to be invested equally throughout the rest of its target markets, says managing partner Erik Peterson. He adds that Aureos aims for a 20% return to investors. The shop, which targets companies with sales between $5m and $75m, says its investors include international and regional asset managers, pension funds, insurance companies and development finance institutions. The fund’s first closing took place in December 2007.

Mexico’s Alestra received consent from holders representing $67m (35%) of its $193m in 8% 2010 bonds, it says. The figures apply to the results as of the August 7 early participation deadline. The telecom jointly owned by Grupo Alpha and AT&T was offering an additional $2.50 per $1,000 for early consent, and holders will have until August 21 to tender bonds at the normal price. Alestra is funding the buyback with proceeds from the August 5 sale of $200m in new 11.75% 2014 bonds. Citi and Morgan Stanley are managing the tender as well as the new bond sale.