Category: Regions

Pemex plans to sell $2bn-$3bn equivalent of bonds in the Mexican market, according to CFO Esteban Levin. The state-owned oil producer has recently requested approval for a MXP70bn 5-year shelf for local bonds. Total borrowing in 2009 should be $7.5bn-$10.5bn equivalent, Levin says. This would include including $1.5bn-$2.0bn from export credit agencies, $2.0bn-$2.5bn from bank loans, and possibly another $1bn in dollar bonds to follow $2bn placed in January. The net debt load should increase $2.5bn-$3.0bn this year. Pemex has not given any indication of the timing of a first local issuance, to be 1-20 years in tenor. It will be led by Santander and other banks will be named later.

Mexico’s Comerci has reached an agreement with four creditors to extend a standstill agreement past March 2 to March 23. Barclays, Goldman Sachs, JPMorgan and Merrill Lynch have filed to sue the retailer in US court, but agreed in late January not to pursue their demands while Comerci restructures debt. Comerci says it continues negotiating with creditors, without offering additional detail. The retailer filed for bankruptcy last year following a derivatives-induced cash squeeze that left the company with no resources to meet debt obligations. It is advised by Rothschild and Credit Suisse.

HSBC’s impaired LatAm loans increased 37% last year to $2.3bn, fueled by a 32% jump in Mexico, largely in credit cards driven by portfolio growth in personal lending, seasoning and higher delinquency rates. The bank says it has clamped down on underwriting, collection and customer acquisition, but says Mexico was also hit by credit quality deterioration among SMEs as the economy weakened. In Brazil, impaired loans rose by 34% due to growth in personal lending, deterioration in payroll and vehicle finance loan portfolios, and weakness in a number of real estate portfolios and corporates exposed to the sharp rise in the value of the US dollar in the second half of the year, says HSBC. The increase was less than last year, when LatAm new loan impairment charges rose by 63% to $2.0bn.

Bids for Mexico’s Paquete del Pacifico tollroad (Farac II) auction were few and far between, causing some consternation for the government. “Without a doubt there was some surprise about the big differences [in the bids,]” Alonso Garcia Tames, director of Banobras, which is running the process, tells LatinFinance. The high profile follow-up to the Calderon administration’s MXP40bn 2007 Farac I, drew meager bids from just 2 interested parties Friday, and was scrapped. Offers from Mexican operators ICA and IDEAL fell short of the minimum. IDEAL bid MXP6.77bn for one concession in the package, while ICA proposed a much smaller MXP2.54bn. The government’s target price was not disclosed. Bidders were asked to offer a value for one of the new concessions, while the winner would be awarded the entire package, assuming all maintenance and construction costs. The total was estimated most recently at around MXP35bn. Banobras officials said late January they were confident there would be lots of competition and plenty of pricing tension at auction. Three Spanish participants in the final round – OHL, Iridium and Globalvia – offered only apologies for not bidding. Garcia says the past week’s poor global market performance likely led bidders to revise downwards projections for tollroad usage, while also raising estimates for cost of construction and maintenance. Bankers away from the process wonder if ICA even wanted to bid, given its low offer. ICA officials did not return calls seeking comment.

Pemex has applied to Mexican regulators for a 5-year MXP70bn program to sell bonds in the domestic market. The state-owned oil producer would issue fixed or floating-rate bonds at maturities of 1-20 years, according to documents filed with the Mexican Bolsa, which do not give any indications of timing or size. Santander has been identified as structuring agent and a bookrunner on a first issuance, with other banks able to be added later. Pemex sub-director of finance and treasury Mauricio Alazraki told LatinFinance last month that the state-owned oil company was considering a local markets issue this year, declining to state at what tenor or price. Mexico’s undersecretary for public credit Gerardo Rodriguez says the finance ministry is working with Pemex and state utility CFE on issuances that would serve to help open the market for corporates, noting that such AAA credits should expect 3-5 years tenor. Pemex has already tapped the dollar debt market this year, raising $2bn in 8% 2019 bonds priced to yield 8.25% in January, on about $6bn in demand. The issuer faces $19.4bn in 2009 investment needs and is set to increase its net indebtedness by $2.5bn-$3.0bn.