Category: Regions

Mexican borrowers are having to work much harder this year to woo investors, and frequent issuer Hipotecaria Su Casita is no exception. “Things have changed completely,” says Su Casita CFO Mark Zaltzman. “We’ve had to completely change our strategy.” By contrast to last year, when investors were not interested in meeting but still placed huge orders for the bonds, Su Casita now has to go and see every buysider and explain all details of a transaction. It is also doing a lot of non-deal roadshows and, like a high grade US entity, flagging for investors full details of the year’s issuance plan. Transparency and reporting has become crucial. “This has been an extremely slow year,” says Zaltzman. The official adds that by this point in the year, when Su Casita has only done one RMBS, it should have done 2-3 transactions. Su Casita started issuing in 2002 and was last year’s second biggest Mexican corporate borrower, according to Zaltzman. “This is now a buyer’s market and we cater to that fact,” he adds. Su Casita did a European roadshow in November to assess demand for covered bonds. It sees value in the structure, which has no prepayment risk and brings diversification of the investor base. But Zaltzman notes limitations on the liquidity side, since the buyer base typically wants EUR500m or more. Su Casita is not expected to issue in this format.

S&P has placed on credit watch positive the BB minus rating of Mexican cable, internet and phone provider Cablemas, including $175m senior notes due 2015. The action indicates the potential for an upgrade following the recent announcement authorizing the conversion of Grupo Televisa’s long-term convertible notes into 99.99% of the equity of Alvafig, which holds 49% of Cablemas’ voting equity, the agency says. Also helpful is the recent acquisition by Alvafig of an additional 11% of Cablemas, which eventually will lead Televisa to own about 60% of Cablemas stock. “We believe Televisa’s support of Cablemas is a major rating factor,” the agency says.

Moody´s has downgraded the Mexican state of Nayarit to Baa3 from Ba1 with a stable outlook. “The downgrade reflects the state’s uneven financial performance and negative liquidity position, which limit financial flexibility,” the agency says. The downgrade also reflects an aggressive capital plan for which the state plans to borrow MXP1.2bn. “This new debt, combined with the gradual deterioration in financial performance experienced in recent years, will exert significant pressure on the state’s budgetary flexibility,” the agency adds. Should the debt materialize, Moody’s expects debt service cost, which was equivalent to 2% of operating revenues in 2007, to increase to 6%, while the outstanding debt balance would increase to 13% of total revenues this year, compared to 4% in 2007, the agency adds.

Metrofinanciera, the Mexican housing lender, is seeking private sources of funds to shore up its balance sheet. “We are looking at ways of strengthening our capital base, talking to investors and global banks,” CEO Armando Guzman tells LatinFinance. Rating agencies and bond markets have fretted over Metrofinanciera’s ability to refinance recent rapid expansion. But Guzman says the firm is in good shape and rejects rumors that Metrofinanciera may be up for sale. The official says agencies were concerned about short term debt and a recently established land bank. But he claims that neither is problematic, and adds that company debt with a maturity of less than 12 months has been cut to MXP1.3bn from MXP7.6bn last year. “We think the land bank is a natural backwards vertical integration of the business,” says Guzman, adding that it has $500m invested in Mexican land. “We have enormous challenges to keep up our business strategy and growth strategy,” adds the official. Guzman says the company is seeing decent consumer loan opportunities, as well as a new credit card venture. Metrofinanciera last month suffered downgrades as agencies fretted over exposure to short-term maturities and rising costs of funds.

The Mexican state of Sonora has closed a MXP4.6bn 30-year peso bridge loan to support its Plan Sonora Proyecto infrastructure plan. The AA (Fitch) facility arranged by Banorte and Project Finance Associates (PFA) pays 100bp over 28-day TIIE, PFA executive director Mauricio Gutierrez de Gregory tells LatinFinance. It is backed by tax receipts. By the end of the year, the facility is expected to be replaced with a takeout of up to MXP10bn in 30-year bonds. The jumbo deal, which will sold to local pension funds and insurance companies, will also refinance $520m equivalent in state debt. The fixed rate bond will issued by the end of 2008 through PFA and Banorte, Gutierrez says. The plan is to have UDI and MXP tranches, and PFA is looking for a monoline wrap.