Moody’s has lowered Ford Credit de Mexico’s national scale debt rating to Ba3 from Baa3. The move follows Moody’s action on parent company Ford Motor Credit Company’s rating (to B3 from B2), and a lowering of Ford Motors to Caa1 from B3, based on liquidity concerns.
Category: Regions
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IFC Disburses Peru Gas Funds
The IFC has disbursed a $15m 4-year revolving senior debt facility to BPZ Exploracion y Produccion to help it exploit Peruvian natural resources. It is working with commercial banks to add $200m deal under the same terms. “As the credit markets have dried up, IFC has stood alongside BPZ as a strong partner,” says Manolo Zuniga, BPZ’s president and CEO. The loans will support BPZ’s drilling program in offshore Block Z-1’s Corvina oil and gas field and the start-up of its Nueva Esperanza power plant, which will be fired with gas supplied from the Corvina field. IFC’s loan complements previous equity investments worth $39m.
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Grupo Mexico Buys Cinemex
Grupo Mexico’s entertainment arm has bought Mexican movie theater business Grupo Cinemex from AMC Entertainment for $311m. The strategic sale, which was five months in the works, is expected to close in 60 days and was done to generate cash. Grupo Mexico, which apparently did not use an advisor, will fund the deal with cash on hand, says a banker familiar with the transaction. The deal was done by competitive 2-phase auction. Credit Suisse advised the seller. Cinemex operates 44 theatres with 493 screens primarily in the Mexico City Metropolitan area. Prior to this deal, Entretenimiento GM de Mexico bought another movie theater chain in Mexico, MM Cinemas.
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Fitch Turns Negative on Mexico, Chile
Fitch has revised the rating outlook of Mexico to negative from stable, and of Chile to stable from positive, following a review of 17 major investment-grade EM economies. The revision of Mexico’s BBB+ rating “reflects concerns over the capacity of the economy and policy framework to absorb smoothly three simultaneous external shocks: the worst US recession for 25 years, reduced capital and financial market flows and lower oil prices,” the agency says. Fitch is also concerned that the fiscal and external cushions Mexico has in place to absorb the shocks are small relative to peers, and that its corporate sector is especially vulnerable. The move on Chile’s A rating reflects an upgrade being less likely given the recent decline in commodities and slowdowns in the economies of trading partners. Fitch affirmed the BBB minus ratings and stable outlooks of Brazil and Peru. Following the Mexico move, Fitch revised the outlook from stable to negative on eight Mexican banks: BBVA Bancomer, Banamex, Santander, HSBC, Nafinsa, Banobras, Bancomext, and IPAB. Chile’s Enap and Codelco were dropped to outlook stable from positive.
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EM Beer Spill Rattles Analyst
A slump in EM beer drinking, including a reported Colombian drought, is the most disturbing sign of global recession, according to BMO Capital Markets analyst Andy Busch, who notes an “inhibition to imbibing.” The analyst refers to a Wall Street Journal report citing InBev and Carlsberg’s decline in Q3 Russia beer unit volume. The story notes that SABMiller, which has a heavy presence in developing markets, is this week expected to report slow growth in some markets when it reports earnings. It adds that three of the worst markets are Russia, Colombia and South Africa. “When the EM stop drinking, we’re all in trouble,” says Busch. Either that or Colombians have shunned weak foreign beer in favor of aguardiente for toasting continued resilience to the global financial storm. “Domestic debt and interbank markets have continued to function without disruption, and there have been no signs of liquidity strains,” says an IMF mission in a Friday statement, following a recent Colombia visit. The fund, which is generally upbeat on the Andean nation, is presumably not referring directly to alcohol consumption.
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Jamaica Remittance Growth Slows
Jamaican remittances will hit around $2bn in 2008, in line with the government’s recently revised 6%-7% projection for remittance growth this year, but half the average 12% pace seen over the past 5 years, says JPMorgan. The original forecast was for 10%-11% expansion, it adds. Most recent central bank data shows money flows hitting $1.5bn in the first 9 months of the year, 8.8% higher than in the same period of 2007, but slower than the 11.1% pace of the first 9 months of 2007. In full-2007, remittances rose 11% to total $1.96bn, or 17% of GDP, coming in as the country’s top foreign exchange earner, JPMorgan adds.
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Nestle Ecuador Readies Domestic ABS
Nestle’s Ecuador unit plans to launch next week a $70m accounts receivable securitization in the domestic market. The issuer plans to bring a $10m 2-year tranche paying 7.5%, a $20m 4-year piece paying 8.0% and a $40m 5-year slice at 8.5%, according to a broker who saw Nestle’s presentation. The bonds are backed by accounts receivable from clients including Corporacion Favorita and Importadora El Rosado. A guarantee provided by the clients puts the rating from Humphrey’s at AAA. The issuer is expected to target pension funds and public-sector institutional investors, says the broker, noting that the government social security fund has cash to spare and can buy up to 25%. Separately, Telefonica’s Movistar mobile phone operator is also heard lining up a securitization in Ecuador of around $40m.
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Moody’s Sees Serious Jamaica Tests
Moody’s has put Jamaica’s B1 rating on review for downgrade amid rising pressure on the external and fiscal positions, which are expected to intensify and could further deteriorate credit risk relative to peers. “Given the severity of the ongoing global adjustment, Moody’s believes that Jamaica will be seriously tested by the severe global-crisis headwinds,” says Moody’s senior analyst Alessandra Alecci. “The public debt burden and the resources needed to service debt leave Jamaica’s small, open economy with limited leeway to cushion adverse exogenous developments.” The country’s debt burden exceeds 125% of GDP and the current account deficit could reach 20% of GDP this year as the economic slowdown in Jamaica’s key markets such as the US worsens, likely lowering remittances and tourism inflows as the year closes, adds Alecci. “The reliance on market funding at a time when the credit markets are under stress for an undetermined period of time could present Jamaica with a very difficult situation and spark a loss of confidence in the ability to access financing,” she adds. “There is a deterioration of reserves relative to imports and to the country’s external debt, leaving the authorities with limited means to prevent a potentially sharp depreciation as has occurred in other emerging markets.” In addition more than 50% of Jamaica’s public debt is exposed to foreign currency and interest rate movements. The review period could last up to three months.
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Vitro Gets $100m through Bancomext Trust
Mexican glassmaker Vitro has received $100m through a structured transaction from Bancomext, allowing it to continue operating normally, it says. Vitro has placed non-productive real estate assets into a trust to guarantee repayment. After a 3-year period, it can chose to either sell the assets or reacquire them and repay the $100m plus a one-time finance charge of Libor plus 500bp. The advantage of the structure, a spokesman tells LatinFinance, is that the funds received do not add to its debt. The spokesman declined to give the value of the assets involved, noting only that they totaled more than $100m. The proceeds will be used to maintain normal operations. Vitro says it is still in negotiations with its derivative counterparties, and has contracted the Blackstone Group to advise it. Its liquidity position was pinched last month when it revealed a $230m negative position in derivative contracts.
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Fitch Predicts Steep Global Recession
Fitch expects the major advanced economies – US, UK, Euro area and Japan – to next year experience the steepest decline in GDP since World War II. Aggregate GDP is expected to contract by 0.8% in 2009, compared to an estimated 1.1% for 2008. “Tighter credit conditions, consumer retrenchment and falling corporate investment are expected to combine to deliver an unusually synchronized downturn across the advanced economies,” says the agency. World GDP will meanwhile grow by just 1% next year –slowest since the early 1990s – and down from an average 3.5% over the last 5 years, according to Fitch. “The combination of recession in developed countries, lower commodity prices and reduced international capital flows will result in a sharp slowdown in growth in emerging markets, though most will avoid outright recession,” it adds. The recent widening of the credit crisis to EM dampens prospects of companies in advanced economies switching sales strategies to the developing world as the US consumer retrenches, which will weigh on investment. Fitch predicts Chinese growth dropping to little over 7% next year, lowest rate in nearly 20 years, while BRICs overall expand 5.7%, reflecting policy flexibility, external financial strengths and structural factors.