Category: Regions

Mexico’s Telmex plans to sell up to MXP2.5bn in 10-year fixed-rate peso-denominated bonds Thursday. The funds raised will go to general corporate purposes. Inbursa and HSBC are managing the AAA rated transaction.

Mexican mining and railroad company Grupo Mexico plans to put a 3-for-1 share split to shareholders at an April 30 meeting. The transaction applies to MXP2.6bn in outstanding series B shares. Shares closed at MXP75.22 Monday.

Penoles, the Mexican mining giant, plans to restructure about $550m in long-term debt in order to better position its books for a spin off of Fresnillo. It aims to sell new debt in order to repay an 8.39% of 2012 structured silver payable notes issue and other senior unsecured debt. The IPO will result in significant cash in-flows to Penoles, which will also get MXP4.26bn from the precious metals business through a combination of a dividend and a capital reduction. Part of this may be distributed to Penoles’ shareholders depending on cashflow needs. CEO Jaime Lomelin, vp of mining and chemicals Manuel Luevanos, CFO Mario Arreguin, and vp of exploration David Giles will step down from their posts at Penoles and become CEO, COO, CFO and vp of exploration, respectively at Fresnillo, Penoles says. “Penoles will retain between 75% and 77.3% of the ordinary shares of Fresnillo plc depending on whether the over-allotment option is exercised or not. In doing so, Penoles expects to create value for its shareholders and personnel and for Mexico,” says the issuer. The other unit of the firm, Minas Penoles will focus on non-precious metals business. A listing without float will also be obtained on the Mexican Stock Exchange for Fresnillo. As of December 2007, Penoles says Fresnillo mines, development projects and exploration prospects had 291.1m tons of attributable mineral resources yielding 837.0m ounces of silver and 9.4m ounces of gold.

After a successful dollar debt offering in January, the present volatility in the credit markets has Mexico focused on cleaning up its peso debt curve, head of public credit Gerardo Rodriguez tells LatinFinance. Among new initiatives is one aimed at strengthening liquidity in the bonds denominated in the UDI inflation-linked unit. “Mexico has a long tradition of inflation-linked instruments, which now represent 13% of our local market,” Rodriguez says. “We think we have conditions for that market to be more liquid.” Mexico introduced a 3-year Udibono last year and stopped issuing 20-year Udibonos to focus on 3, 10 and 30-year points on the curve. It plans to incorporate the securities into a successful market makers program. Boosting liquidity was also the motivation for including UDIs in the most recent, well-bid exchange warrants transaction, he says. “The country’s infrastructure program will require the intensive use of the local capital markets, and the inflation-linked instruments need more efficient pricing,” says Rodriguez.

As investors in Mexico rethink their appetite for risk, mortgage companies are feeling the pinch, according to S&P. “For this year, we expect lower growth rates and pressures on profitability levels,” says S&P credit analyst Francisco Suarez. Market sentiment has changed dramatically and exhibited two of the industry’s clearest vulnerabilities: its reliance on volatile funding sources and limitations to adequately manage market, funding, and liquidity risks. “These factors have been reflected in increasing refinancing risk for the industry,” says the agency.

Darby, the EM private equity shop, says it is looking at putting together a dedicated vehicle of substantial size for Mexican infrastructure investment. “We are interested in targeting mid-market projects,” Alejandro Schwendhelm, a Washington-based MD for Darby, tells LatinFinance. He adds that large infrastructure projects tend to be very competitive and as a result, not always as high yielding. In Mexico, Darby targets projects that can return up to roughly 25%. Mexico recently established a MXP270bn national infrastructure fund, Fonadin. It will start with MXP40bn from last year’s FARAC toll road project and channel approximately MXP270bn into infrastructure over the next 5 years. Darby is also in the process of finalizing vehicles targeting mezzanine, Brazil infrastructure and Central American banks. Schwendhelm declined to specify expected fund sizes or closing dates.

Mexico’s Nemak plans to reopen a 2014 floater bonds in an offering expected in the next few weeks. The auto parts maker controlled by Grupo Alfa sold MXP2.5bn in the AA rated notes in November. It has not indicated the size of the new offering, to be led by HSBC. Meanwhile, Telmex has indicated in a regulatory filing that it plans to sell up to MXP2.5bn in 2018 fixed-rate notes this month, possibly accompanied by a floating-rate tranche, in a AAA rated sale led by Inbursa and HSBC. The issuers join a steady pipeline already featuring Cemex, awaiting the sale of MXP3bn in 2018 fixed and 2010 floating AA+ bonds via Santander. Bottler Arca has also refiled for a MXP6bn 5-year shelf, with BBVA listed as the lead.

Moody’s has upgraded the local rating of the State of Mexico to A3.mx from Baa1.mx and a bond issue is anticipated soon. The state’s global scale rating remains at Ba3 but the outlook has been changed to positive from stable, the agency states. “The change in the national scale rating and the outlook for the global scale rating stems from the state’s positive trends in its debt and financial indicators, and the expectation that these trends will continue,” Moody’s says. The state is heard lining up a large MXP 30-year fixed rate issue with a partial guarantee from Banobras. Proceeds are destined to restructure debt and a transaction is expected this month.