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.
Category: Regions
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.
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.
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.
Confusion Prevails over Namisa Valuation
Analysts are at odds over the valuation implications of CSN’s sale of a 40% stake in Namisa to a Japanese consortium for $3.12bn. Mining specialists say it is difficult to identify the price in dollars per ton of iron ore. Analysts at local shops offer a range of implied per ton values from the deal – from $195 to $230 – all of which are subject to change, since CSN will only unveil details, i.e. which assets are included – this coming week. “It’s expensive,” says Banco Brascan mining analyst Rodrigo Ferraz, who calculates the deal went for $195 per ton, higher than what ArcelorMittal paid for London Mining’s Brazil assets earlier this year, and Anglo American paid for a stake in MMX. Mittal paid some $176 per ton for London Mining’s assets, according to Bradesco. Itau’s estimate for Namisa stood at around $6.8bn, which makes the $7.8bn paid look like a good deal for CSN. Hallgarten’s Christopher Ecclestone notes the large consortium’s move on Namisa is a way to increase bargaining power in annual iron ore price negotiations. Assuming they are interested in holding the stake for several years, they might have looked to pay up now to secure a proprietary source of ore and reduce dependence on other exporters like Vale, he adds.
Aureos Closes Colombia PE Fund
Private equity firm Aureos Capital has reached the first closing of a $35.8m Colombian fund. Investors include three Colombian pension funds and an insurance company. The new fund will target investments of $2m-$10m in small to mid-cap businesses in Mexico, Central America, Colombia and Peru. It will invest in parallel with Aureos’ other LatAm funds, which total $140m.
CSN Mum on Namisa Sale
CSN executives say they are not ready to unveil any news regarding the potential sale of its Namisa iron ore mining unit. A Japanese daily reports that a consortium led by Nippon Steel and Itochu are set to acquire a 40% stake in the project for JPY400bn, which would value the asset at around $10bn. CSN executives would not comment on the story, saying they are not ready to discuss the deal. CFO Otavio Lazcano was heard in New York earlier this month seeking to close a sale and was rumored to be in talks with the Japanese consortium, though people close to the company speculate that talks with other groups also took place. CSN hired Goldman Sachs to advise on the sale of the unit, whose value is estimated at $5.0bn-$8.5bn according to analysts and bankers away from the process.
Soriana Rebuffs Moody’s Downgrade
Mexico’s Soriana responded to a lowering of its rating to Ba1 from Baa2 by Moody’s by stating plans to make an MXP800m payment on short-term debt due Thursday. It also says that it successfully placed CP last week below the TIIE rate (8.66% Tuesday), and does not have FX-linked derivative positions. Moody’s cut Soriana amid fears about an aggressive liquidity profile caused by a shift towards CP issuance in recent months.
Mexico Airport Experiences Delays
Mexico’s government is waiting until at least the first half of 2009 to open the bidding process on the Maya Riviera Airport. It had expected to tender the project, which could cost $200m, before the end of this year. The news follows a delay on the bidding for the Punta Colonet port project and other major bids, as the Calderon infrastructure agenda suffers due to the international liquidity crisis.
Investors Sniff Equity Buys
LatAm stocks remain volatile and likely to overshoot further on the downside amid panicked and technical global equity trade, continued in Asia Thursday. But some investors say the region’s main indices, including the Bovespa, are nearing bottom and they are taking the opportunity to buy into stocks that look undervalued. “Today there were good buying opportunities,” says a New York-based hedge fund manager focused on LatAm, who asks not to be identified. He adds that he is buying Brazilian banks, consumer goods companies and telecoms, including Telmex and America Movil. “Going forward, the most liquid stocks like Vale and Petrobras are going to be the focus. These will come back a lot in the next several sessions,” the buyer predicts. While he likes big liquid names, the investor adds that he is less sanguine about pure commodity plays, since the outlook for prices appears to be deteriorating. “It’s difficult to know where the Bovespa will end the year, but I’d venture it will be much close to 50,000 than 35,000,” Ronaldo Patah, head of equity and hedge fund strategies at Unibanco Asset Management, with BRL60bn under management, tells LatinFinance. He adds that he does not see how the country’s main index could fall much lower than current levels. The Bovespa closed at 36,833 yesterday, a new low. In the rout, investors resorted to cash rich companies and sectors like telecom, logistics and power companies, he notes. Among the best performers in Brazil were Telemar and Brasil Telecom, up 3.5% and 0.6% respectively. Most buysiders will be waiting for stability, particularly in developed world markets, before jumping in for size.