Category: Regions

Shareholders of Mexico’s ICA have approved the sale of up to 150m shares, the builder and concessionaire says, in a deal that should raise $350m. The Mexican builder is proposing to issue 45m units locally and 105m globally. A sale can take place in the next 12 months, but is expected in July. The transaction would include a 15% overallotment option. About half the proceeds would be used to invest in new infrastructure products, ICA says, with the remainder spent on civil construction, research and maintaining existing projects. Santander and BofA-Merrill Lynch are managing both the international and domestic sales, with co-managers yet to be named. The sale would be the first new equity offering from Mexico since Genomma Labs’ $260m IPO in June 2008.

Mexico’s Femsa has scheduled the sale of up to MXP6bn in domestic bonds for July 8, according to bankers managing the transaction. The terms remain to be set, but the beverage company can pick from a floating tranche, a fixed-rate peso tranche and a fixed-rate tranche denominated in UDIs. BBVA and Santander are managing the sale. As in a deal from fellow blue-chip Bimbo earlier this month, the issuer has set a high limit and left multiple options to get the best price from a recovering market. On June 10, AA rated Bimbo got TIIE plus 160bp on MXP5bn in 2014 floaters, 6.05% on a MXP3bn 2016 UDI tranche and 10.60% on 2016 fixed notes. S&P gives the new Femsa issue a AAA national rating, while Moody’s recently lowered Femsa’s corporate rating to Aa1 from Aaa. The brewer last visited the domestic market in May 2008, selling MXP1.5bn in 2011 bonds at 2bp through 28-day TIIE via HSBC.

Mexico’s Telmex is talking to the loan market about raising up to $800m in 3-year funds, say syndications officials. The telecom’s $1.3bn August maturity is expected to be mostly refinanced, while the balance is covered by the company’s ample cash position. Telmex is conducting talks with banks on its own, entertaining a variety of proposals. Bankers say the company will shoot for the lowest price possible. At launch in 2006, the deal paid Libor plus 20bp, as part of a $3bn package including a $1bn 5-year at 25bp and $700m 7-year at 32.5bp via leads ABN, BBVA, Calyon, Citi and HSBC. With its biggest and most liquid relationship lenders, the telecom might achieve a spread as low as Libor plus 175bp for 3 years, guesses one syndicator. However, that would likely limit size, leaving out those requiring higher spreads. Other MLAs likely pitching Telmex are Santander, BNP Paribas, Barclays and SocGen. Most will expect ancillary business, including local market and cross border bond takeouts, especially if pricing ends up at 200bp or less. Lenders are keen to do business with Telmex, so the question is not whether the loan will get done, but at what price. High grade Chilean ENAP recently clinched $300m in a coordinated series of bilaterals with BNP, Santander and HSBC. The all in price was for the facility was heard in the 200bp area. Bankers appear resigned to the fact that payback on loans to blue chip clients will be severely compressed. This, despite generally restrictive credit conditions for most borrowers in the region, especially high yield.

Fitch, which put Mexico’s BBB+ rating on outlook to negative from stable in November, might have soon find enough reason to downgrade the sovereign as the economy shows little signs of improvement. The agency expects Mexico’s economy to shrink by 5.5% this year, which is more severe that the 3.0% contraction expected of other sovereigns in the BBB median. “Mexico’s five-year growth average has lagged that of the BBB median and the current economic contraction will prevent the country from closing this gap,” it says in a report issued Wednesday. “Moreover, since 2001, Mexico’s real per capita GDP growth has underperformed the BBB median, thus eroding the country’s once forefront position among its peers,” it explains. Also affecting Mexico’s growth, says the agency, is the rising wave of drug-related violence, which it believes could impact FDI and investor and consumer confidence. In addition, high dependence on oil revenue, which accounts for more than 35% of public sector revenue, also makes the country vulnerable, as Fitch does not expect oil prices to recover strongly in 2010 and sees them below $70 per barrel for the Mexican mix. Nevertheless, Fitch says that progress on fiscal and other reforms, a successful navigation through the current global recession and financial crisis with the credibility of the country’s policy framework well intact could help in reverting the rating the outlook to stable.

AIG has agreed to sell its consumer finance operations in Mexico to Desarrollo de Negocios Integrados and Inversiones (DNI) for an undisclosed amount. The units being sold are Sofom AIG Universal and Marketcenter Services. UBS advised AIG on the sales while Kramer Levin Naftalis & Frankel served as legal counsel to the insurer. Separately, on June 3, AIG agreed to sell 100% of its shares in its consumer finance operations in Argentina to Banco de Galicia y Buenos Aires and an investment group arranged by private equity firm Pegasus for $44m in cash. The fallen insurance giant has also sold its 48% stake in a Brazilian joint venture AIG Unibanco to Itau Unibanco for BRL820m.

Mexican entertainment company Cia. Interamericana de Entretenimiento (CIE) wants to issue MXP1.2bn worth of new shares, at MXP6.00 per share, to help it pay down some MXP6.6bn in debt, of which some MXP500m matures this year, says company spokesman Jorge Padilla. CIE will seek shareholder approval for the capital increase in a July 10 meeting. Separately, CIE will soon close on the sale of three amusement parks located in Mexico, says Padilla. A group of local investors led by Xavier Von Bertrab, formerly an executive at Televisa, will pay MXP260m for the parks. Padilla says no outside advisors were involved. He adds that CIE is seeking buyers for its amusement parks in Florida and Colombia as well. On January 29, Moody’s downgraded CIE’s ratings to B2/Ba1.mx from Ba3/A3.mx on concerns related to the entertainment industry, on which CIE is heavily reliant.