Mexican construction giant ICA is working on Mexico City’s metro expansion project – funded by the government – but it is keeping powder dry for deals coming up later in 2008. “We are expecting some other concessions towards the end of the year where capital may be required, and we are preparing for those,” Alonso Quintana, CFO at ICA, tells LatinFinance. He adds that these include the Farac tollroad sequels and some water projects like a $500m water treatment plant in Guadalara, which should be started this year. Water treatment is typically not hugely lucrative, but Quintana says overall returns make it worthwhile, including revenue from construction and structuring. “We try to make it that overall our return is double digit, hopefully getting to 15% area,” says the official. ICA has risen to prominence in Mexico, beating to the punch Carlos Slim’s IDEAL on several high profile transactions. “Our objective is not to beat IDEAL. Our target is to win the big projects we feel most competitive in and where we have most advantage, where we can create more value,” says Quintana. He adds that ICA is partnering with IDEAL in some projects. ICA is currently focused on roads, airports and some water projects. This includes a high-speed road link between the capital and Veracruz port.
Category: Regions
Prudential Approves Loan to Verde Mexico
US real estate conglomerate Prudential has closed a $46.5m loan through its Mexican mortgage subsidiary for Verde Realty’s Verde Mexico unit. The fixed rate 84-month term loan was combined with an existing $93m loan and is secured through a pool of 22 industrial manufacturing properties located in Tijuana, Juarez, Reynosa and Chihuahua, Prudential says. Terms of the loan were not disclosed.
PE Fund Planned for Mexican Miners
Mexico is working on setting up a $100m-$120m private investment fund to take temporary minority stakes in mining companies and raise cash through equity in Toronto or debt/equity in Mexico. “We will finish the study this year and if everything is favorable, we will launch it in 2009,” Mexican mining coordinator Norberto Roque tells LatinFinance. The fund is a Mexican economy ministry initiative, but the government will have only a 20% share, with the rest coming from private sources. This includes $20m from Corporation Mexicana de Inversiones, a fund of funds partly owned by Nafinsa. “The government will catalyze participation from other economic agents,” says Roque. The new vehicle will invest on a medium term basis. “Depending on the project, it could be 5-7 years,” says Roque, talking about commitment period. Mining is a leading sector for foreign investment in Mexico, which is also working to boost technology and marketing of its geological potential. “We are the biggest recipient of mining investment in Latin America,” says Roque, adding that Mexico’s main rivals are Peru, Chile, Brazil and Argentina. “There’s a lot of competition and for that reason, we have to work very fast to maintain our level.” Mexico expects to get $3.3bn in mining investment this year, up 54% year-on year, rising to $3.6 billion in 2009. Roughly 40% of that comes from abroad, including 77% from Canada, says Roque.
Mexico Preps Novel Mining Fund ABS
Mexico plans to tap local debt markets to maintain development of its minerals and metals sector, the government’s mining chief tells LatinFinance. The Fideicomiso de Fomento Minero (FIFOMI) aims to make loans to support the mining sector totaling $500m equivalent this year, rising to $1.1 billion by 2012, says Norberto Roque, Mexico’s mining coordinator. It will source extra funds from domestic capital markets. FIFOMI recently did a MXP300m issue of short term certificados de credito, through Scotiabank. “Next year, we’ll do not just certificados de credito, but a securitization of the portfolio,” says Roque. In 2009, FIFOMI is planning to place structured bond issues of MXP500m-MXP1bn in size with a 3-5-year tenor, market conditions permitting. “Depending on the demand for our credit, we need to be parri passu with the issuance,” says Roque. Loans of some $680 million are planned for 2009. Roque adds that the domestic debt deals will not carry a government guarantee. “Since the government is not putting in money, we’ll use the markets to get liquidity for the fund to be able to lend more,” says Roque. FIFOMI lends to mining SMEs – including operators, equipment providers and other support companies – with a view to strengthening the supply chain. Loans are for a tenor of up to 5 years and an average size of MXP1m, priced basis TIIE. FIFOMI has lent over $300m so far this year to SMEs and Roque describes the loan portfolio as “healthy” with no problems.
Cement Maker Shops Short MXP Bond
Cemex plans to sell up to MXP2bn in 2010 floating-rate notes in the Mexican market as soon as September 24. Proceeds from the deal rated A+ on a national scale will repay short-term bank credit paying Libor+35bp that was used to refinance debt. HSBC is managing the transaction. The sale would be the 10th from a MXP30bn shelf, and follow a MXP1bn 2010 bond priced in April at TIIE+36bp via ING and Santander. The choice of such short tenors for such a respected name highlights the reluctance of the local buyside to take on any long term commitments in the current choppy market.
Panama Canal Gets Pre-emptive Rating
Moody’s has assigned a prospective rating of A2 to the approximately $2bn in senior debt expected to be issued by the Panama Canal Authority (PCA) to fund its expansion program. The rating for the wholly-owned unit of the Ba1 rated government of Panama is supported by the canal’s position as a unique infrastructure asset that is competitive and unlikely to be replicated, says Moody’s, which also lauds an exceptionally strong operating position. The $5.25bn 5-year construction will be executed through a series of contracts for excavation, dredging and other discrete components. The most complex segment, the construction of the third set of locks, will be undertaken through an all-in design-build contract which is expected to be awarded in December at the earliest. The PCA plans to borrow $2.25bn to fund the project, with the remainder coming from revenues. It has not made any firm decision on debt financing, but has received more than $2.25bn in loan offers from multilateral banks, including $500m each from the IDB and IFC. Assuming it stays on budget – far from certain in a deal of this scale – PCA may not need the rating.
America Movil Calls on Locals
Mexican telecom America Movil scored MXP5.1bn in new debt in the local market Wednesday raising 5-year paper across two tranches. The deal was printed amidst turbulent external market conditions that saw Telemar pull its $1.5bn offering of 5- and 10-year notes. A MXP3bn tranche of 2013 notes via HSBC and Inbursa came at Cetes plus 55bp, a handful of basis points wider than expected, say bankers on the deal. A second 5-year UDI-denominated tranche via Merrill Lynch and Inbursa worth MXP2.1bn came at 60bp over the 5-year udibono, with an all in cost of 4.10%. “The company is always very price sensitive, so it chose to raise slightly less in UDIs to secure the 60bp spread,” notes one banker close to the deal. Still, bankers say the amount of total proceeds is in line with the MXP5.0bn America Movil was hoping to secure. The 50% oversubscription for the UDI tranche and the 30% in additional MXP orders indicate demand was sufficient to close the deal. America Movil returned to the local market to secure shorter-dated paper because of volatile conditions in the dollar market, say bankers. The company, rated AAA on a national scale, is among LatAm’s most seasoned borrowers. It plans to use the proceeds for working capital.
Mediterraneo Moves on Mexican Lender
Privately held Mexican mortgage lender Credito Inmobilario is set to sign an agreement that could lead to a sale of a stake in itself to Spain’s Credito Ahorros Mediterraneo, Gerardo Tarras, Inmobiliario’s CFO, tells LatinFinance. The initial pact, to be announced within a week, will involve Inmobiliario managing some of Mediterraneo’s operations in Mexico, says the executive. But Mediterraneo may also end up purchasing a stake in Inmobiliario by the end of the year or later, adds the CFO. The lender is controlled by GMAC-RFC Mexico and a group of private investors led by Gerardo Sierra, who purchased 55% of the lender for MXP924m in 2005. Inmobiliario attained Sofom status in 2006.
Mexican Bolsa to Sign Chile Link
The Bolsa Mexicana de Valores (BMV) is signing a trading link up with Chile’s bolsa this week, BMV president Guillermo Prieto Trevino tells LatinFinance. Prieto adds that the BMV does not expect to be acquired by the Bovespa, which is seen more as a partner than a competitor. Large non-Latin exchanges looking to establish a foothold in LatAm are more likely to be eyeing the BMV as a target, says Prieto.
Moody’s Gives Bancoppel Thumbs Down
Moody’s has downgraded Mexican retail bank Bancoppel’s rating to Ba3 (stable) from Ba2. Its long-term local scale rating was also knocked down to A3.mx (stable) from A2.mx, says the agency. The downgrade is based on the relative difficulty the bank’s parent, retailer Coppel, would have in supporting it as the corporate entity undergoes reorganization, adds the agency.