Moody’s has lowered the outlook on Maxcom’s B3 rating to stable from positive. The move was prompted by the likelihood of a weakening of the Mexican telecom’s business and revenue growth through 2009, explains the agency. That would extend the period in which the company could reverse its negative free cash flow generation. While Mexico’s large unmet demand for telecom services helps Maxcom’s prospects, lower purchasing power in its target markets and weaker economic conditions contribute to a slower growth outlook.
Category: Regions
Posted inDaily Brief
Analysts Smile on Namisa Sale
Mining analysts applaud CSN’s sale of a 40% stake in its integrated iron ore mining complex Namisa to a Japanese-led consortium. The $3.12bn deal values all of Namisa, which can produce 38m tons of iron ore, at $7.8bn. That also implies that the 40m-50m tons that will be produced at Casa de Pedra, CSN’s main iron ore asset, are worth $8.2bn, bringing the total value CSN’s iron assets to $16.0bn, according to UBS Pactual. “We think CSN created value for shareholders,” notes the shop, adding that $16.0bn is double CSN’s current market cap. Itau’s Marcelo Brisac says the sale came at a premium to recent iron ore asset sales in Brazil. In a report he notes Namisa’s enterprise value per ton is $174, which excludes the asset’s main port, its stake in logistics unit MRS, as well as capex required to meet terms of the sale. UBS’s estimate of Namisa’s EV/ton is $205, but the calculation does not exclude those items. Usiminas’ purchase of J.Mendes in February came at $98 per ton, while London Mining’s August sale to Arcelor went for $151, calculates Brisac, noting those two were done under much more favorable market conditions. While the transaction seems to reaffirm many analysts’ previous valuations of CSN, the fact that it converts part of this valuation – $3bn, to be exact – into cash bolsters the company’s case for a higher stock price – a plea it has made repeatedly in recent years. Itau says its fair value estimate for the company is not changed by the deal and maintains its underperform recommendation for the stock with a 2009 year-end target of BRL62.00. CSN shares closed at BRL26.00 Thursday, down 1.7%.
Posted inDaily Brief
Scotia Securitizes Mexican Road Credits
Scotiabank’s Mexican unit has priced MXP4.29bn in 2012 bonds backed by loans to a road package belonging to the Fonadin infrastructure fund, at a fixed rate of 8.35%. The AAA rated notes feature a guarantee from the Mexican government and were placed with a broad group of institutional investors, according to bankers on the deal. The loans were made to a package of four roads – Cuernavaca-Acapulco, Cordoba-Veracruz, Leon-Aguascalientes and La Tinaja-Acayucan – held by the Fonadin trust (previously known as Farac) in the late 1990s. Scotia’s capital markets unit managed the sale.
Posted inDaily Brief
Brysam Global Acquires Stake in BCSC
Brysam Global Partners has acquired an 18.8% stake in Colombian bank BSCS for $98m, the latter said. BSCS is Colombia’s eighth largest bank and has a 4% market share in terms of assets, which surpass COP6bn. Brysam is a private equity fund that focuses on emerging markets and mainly handles cash for JPMorgan. Neither party disclosed the names of the advisors involved.
Posted inDaily Brief
WBank Approves Guatemala, Colombia Loans
The World Bank has approved a $200m loan for Guatemala and a $30m loan for Colombia. The Guatemala loan has a maturity of 26.5 years and a grace period of 8.5 years. It also has a front-end fee of 0.25% of the total loan amount. The loan, the first of three development policy loans that the World Bank is extending to the country, will support fiscal and institutional policies to improve economic growth and maintain fiscal stability. The Colombia loan, with a maturity of 10 years and a grace period of 5 years, will provide funds to improve Bogota’s integrated massive transit system, including the subway.
Posted inDaily Brief
Vitro Continues Creditor Talks
Mexico’s Vitro says it is still in discussions with creditors to consider options for meeting its debt obligations during a volatile period in capital markets. Last week, the glassmaker said its derivative contracts had a negative position of $227m, including $33m in FX and interest rate derivatives. As of Q2, Vitro was facing $123m in amortizations this year, with $28m due in 2009. Its outstanding debt is about $11.35bn.
Posted inDaily Brief
Mexico Development Banks Provide Jumbo Guarantees
Nafinsa and Bancomext have launched a program through which they will provide MXP50bn in partial guarantees to Mexican companies needing to roll over short-term debt. The two development banks will guarantee up to 50% of the amount of new debt issued. Businesses and non-bank financial companies will be able to have the guarantees on up to 180-day paper issued through the end of 2008. The program was initially slated to launch November 1, but it was moved forward, as more Mexican borrowers have struggled recently to sell short-term debt at auction. Mexican companies have to roll over some MXP32bn in short-term debt by the end of the year. Nafinsa and Bancomext are also making available MXP35bn in credit facilities to small and medium-sized enterprises.
Posted inDaily Brief
S&P Lowers Jamaica Outlook
S&P has cut Jamaica’s outlook from stable to negative, it says, as liquidity concerns complicate its debt obligations. “The country’s reliance on external funding for its sizeable fiscal and external deficits is becoming more problematic because of deteriorating global economic and financial conditions,” the agency says. The B rated sovereign successfully raised half of the external amortizations due this fiscal year, the agency notes, and enough to cover a bullet payment in February 2009 on its EUR200m 10.5% bond. It is also hammering out some $600m in loans over 3 years from the IDB, which could be as much as $1bn over 5 years. S&P notes that if Jamaica gets through this difficult period without significant loss of reserves, and the current account deficit adjusts in an orderly manner, the outlook could be revised back to stable. Jamaica sold $350m of 8.0% 2019 bonds in June.
Posted inDaily Brief
ASUR Buys Land From Fonatur
Grupo Aeroportuario el Sureste (ASUR) has purchased 130 hectares of land in Huatulco from Fonatur, Mexico’s national tourism fund, as part of a bidding process. The deal is worth MXP286.3m and requires that ASUR build 1,300 hotel rooms on the property within four years. ASUR, which trades on the NYSE and the Mexican Stock Exchange, has a market cap of $1.2bn.
Posted inDaily Brief
Peru Signs Debt-for-Nature Swap
The US and Peru have signed a debt-for-nature agreement totaling more than $25m in which the US will reduce Peru’s debt payments in exchange for protecting the latter’s tropical forests. This agreement with Peru was made possible by the Tropical Forest Conservation Act of 1998. It will complement an existing TFCA debt-for-nature program in Peru dating from 2002, a 1997 debt swap under the Enterprise for the Americas Initiative, and the US-Peru Trade Promotion Agreement, which includes a number of forest protection provisions. With this agreement, Peru will be the largest beneficiary under the Tropical Forest Conservation Act, with more than $35m generated for conservation. Other countries in LatAm to have benefited from this plan are Belize, Colombia, Costa Rica, El Salvador, Guatemala, Panama and Paraguay.