Category: Regions

S&P has changed the outlook on Ford Credit de Mexico’s mxBBB- to negative from stable following a similar action on parent company Ford Motor. The latter faces economic challenges in the US and has announced that it does not expect its auto business to be profitable until 2009, the agency says.

The Mexican equity market is expected to weaken over the summer, according to Citi, following US macro weakness and less global investor complacency. “A break below 30,000 is possible,” the shop says. A rally to 35,000 is expected by year-end on hopes of better US and Mexican economic news, Citi adds. The shop tips Walmex, Homex, ICA, Mexichem and Asur as top picks in the Mexican market, which was trading over 31,000 Friday. Citi remains overweight. “Sound macro fundamentals allow Mexico to lean into economic weakness with fiscal easing,” says Citi. “Higher inflation, however, poses a policy risk,” it adds. The primary Mexican equity market appears to be picking up. Genomma Lab Internacional is heard in the works, targeting a raise above $300m via IXE and Santander locally, Merrill Lynch and UBS internationally. Timing should be roughly in line with the BMV’s own IPO, which is slated to price mid-June. The latter could raise $440m and represents a significant landmark for Mexican equity markets. The initial range for the deal via BBVA and UBS is MXP14.00-MXP19.00, Dealogic says.

Several issuers have filed with Mexican regulators for offerings expected in June. Homebuilder Sare is awaiting regulatory approval for a floating-rate 2013 bond of up to MXP1.5bn. The A3 transaction will refinance debt and is managed by BBVA. Separately, truck builder Paccar Mexico, manufacturer of the Kenworth and Peterbuilt brands in Mexico, plans to issue a MXP1.5bn floating-rate bond, also through BBVA. Industrial consortium Xignux is preparing a MXP1.5bn deal through Banamex. Finally, the Mexican subsidiary of Spanish Utility and developer Iberdrola has filed for a fixed- and floating-rate offering to be denominated in pesos and UDIS, through BBVA and Banamex. Also in the pipeline is a senior unsecured debt 2012 issue for up to MXP6bn from Soriana, the retailer.

Soriana, the Mexican retailer, is registering a MXP15bn certificados bursatiles program, according to Moody’s, which rates the first deal Baa2 and Aa2 locally, with a stable outlook. The agency expects the first senior unsecured debt issue to be for up to MXP6bn and have a 2012 maturity. “The MXP15bn program allows for the issuance of peso-denominated, senior unsecured long and short term certificados bursatiles of up to MXN15bn and MXP6bn, respectively, on a revolving and mutually exclusive basis,” says Moody’s. Proceeds are expected to be used to refinance bridge debt related to a recent acquisition of the right to lease and operate 205 self-service stores from Grupo Gigante. The deal added about MXP18bn in short term bridge debt, of which about MXP14.5bn should be refinanced under the new program during the remainder of 2008, says Moody’s in a statement Monday.

State of Mexico has wrapped up the final phase of a MXP25.2bn refinance which extends duration and slashes the price on 87% of its debt. The amortizing deal in 20, 25 and 30-year tranches, with roughly a third of the amount in each, has an average duration of 12.5 years. The weighted average spread is 47bp over 28-day TIIE versus a 170bp spread before the refinance, says Francisco Gonzalez, head of the state’s project finance department. This equates to 9.02% after a swap to fixed rate. “It speaks to the liquidity that is still available in Mexico,” Gonzalez tells LatinFinance. “We have minimized our refinancing needs,” he adds, saying that the state is unlikely to return to market short term for any large transactions. The deal benefits from significant ratings upgrades – including 6 notches from Moody’s – and market improvements since the new administration took over in 2005. Structural enhancements pushed it to AA+ on the local scale. For the first time, Banobras provided a first loss guarantee, for 27% of the deal. Typically the government development bank acts as a lender. The transaction also has a pledge of federal revenue shares and was self syndicated by State of Mexico. Eight banks participated: Dexia (MXP7bn), Bancomer (MXP6bn), Banamex (MXP5.2bn), Banorte (MXP3bn), HSBC (MXP1.5bn), Santander (MXP1.4bn), Interacciones (MXP590m) and Inbursa (MXP500m).

Moody’s has upgraded Mexican holding company Xignux to Ba2 from Ba3, as well as its $11m in 9.5% senior unsecured global bonds due 2009 to Ba3 from B1. The rating is stable and the upgrade reflects the company’s improved profitability and credit metrics. Moody’s also sees solid near term performance expectations, despite a relatively challenging economic environment. Xignux has operations in the foods, electricity and auto sectors.

S&P has placed its long term BBB minus rating on Mexican home appliance maker Mabe pn credit watch negative. The move follows the decision by GE, its major stockholder, to consider strategic options for its home appliances divisions, including the possibility of a sale. GE controls 48% of Mabe and its involvement is considered a key factor in Mabe’s rating, S&P says.

Ideal, the Construction and Engineering firm controlled by Carlos Slim, is preparing to issue up to MXP11bn in bonds backed by future flows from a package of four toll roads. The issue will feature 2015 and 2036 fixed or floating-rate peso-denominated tranches, and a 2036 fixed-rate slice denominated in the UDI inflation-linked unit. The master trust includes the Champa-La Venta, Libramiento de la Ciudad de Toluca, Tijuana-Mexicali and Tepic-Villa Union roads. It is the first master trust in the Mexican market structured so additional roads can be added at a later date, according to a banker managing the transaction. The offer is expected in June. Credit Suisse and Inbursa are leading.