S&P has upped its corporate credit rating on Xignux, the Mexican diversified holding company, to BB+ (stable) from BB and raised its 2009 notes to BB from BB-. “The rating action reflects an improvement in the issuer’s financial profile supported by better-than-expected financial performance during 2007,” says S&P analyst Jose Coballasi. “In addition, the rating action considers that the prospects for the power transformers business will remain favorable and will continue to drive strong results in 2008 and 2009.” The rating on the 2009s reflects the structural subordination of the issue relative to the company’s priority liabilities. Xignux is constrained by the cyclical nature of most of its end markets as well as commodity price volatility and single-digit operating margins. “The ratings also consider Xignux’s significant market share positions, product diversity, and vertical integration,” says S&P. The firm is committed to maintaining a total debt-to-EBITDA ratio of less than 2.5x through the cycle.
Category: Regions
Four Groups Bid for Panama Locks Contract
The Panama Canal Authority has selected four consortia to bid on the contract to build the new locks for the canal expansion. The C.A.N.A.L. consortium is led by Spain’s Acciona and ACS and Mexico’s ICA, and the Consorcio Atlantico-Pacífico de Panama is led by France’s Bouygues Travaux Publics. Bechtel and Japan’s Taisei and Mitsubishi Corporations lead a third group and the Grupo Unidos por el Canal consortium, led by Spain’s Sacyr Vallehermoso and Italy’s Impregilo, is the fourth. The groups will have eight months from the date of issuance of the RFP, expected soon, to present proposals and budgets, with the contract scheduled to be awarded in December 2008. The contract represents the largest project under the $5.25bn expansion, which will double the canal’s capacity by building a new traffic lane. Mizuho is financial advisor to the Panama Canal Authority.
Gazprom Reported Plotting Bolivia Venture
Russia’s Gazprom is in talks with the Bolivian government to link up with YPFB, the national oil and gas company, in an exploration deal heard at $2bn, according to the FT. Russian officials reportedly acknowledged the talks, but they declined to pin a figure on the investment, saying it was too early to discuss. Bolivia has developed an interesting relationship with foreign investors and even nationalized the tin assets of Glencore last year. Still, despite a less than desirable renegotiation of ownership terms on hydrocarbon assets last year, a handful of oil and gas companies remain in the country, including Petrobras and BP, providing expertise needed to operate the country’s gas exploration efforts.
Colombia Seen Holding at 9.50%
Colombia’s central bank is expected to keep its benchmark interest rate unchanged at 9.50% today. Notes from the central bank’s previous meeting seemed to suggest the current level has put the economy on a stable path, according to Credit Suisse. “The monetary policy tightening that started in April 2006 appears to be having the expected dampening effect on domestic demand growth.”
La Yesca Syndication Heads to Retail
The lead banks on ICA’s $1bn 4.5-year loan to fund construction of the 750MW La Yesca hydroelectric project in Mexico are targeting 6-10 banks in a retail syndication expected to wrap up in January. On offer are $50m lead arranger, $30m arranger and $20m manager spots, with DnB Nor already in. Pricing is heard to be in the range of 50bp-60bp, say bankers away from the deal. WestLB is bookrunner on the deal, with NordLB, BBVA, Citi, Santander, Scotia and Natixis as MLAs.
Mexican Local Debt Expected Today
Mexico City’s government is expected to launch the sale of MXP3.64bn in local bonds today. The offering via Deutsche Bank and JPMorgan consists of a 20-year fixed and a 10-year floating-rate tranche. Sigma Alimentos is also preparing an issue of up to MXP2bn in 2014 fixed and 2012 floating-rate notes, through Bank of America. And Wednesday, Geo filed a MXP2bn shelf to issue UDI or peso bonds via Banorte.
LatAm Hit by Fed Move
Latin American indices closed lower Tuesday across the board as the market reacted poorly to a stingy 25bp rate cut from the Fed. Mexico’s Bolsa led the losses with a 2.7% drop. The Ibovespa was down 1.4%, Peru’s IGBVL dropped 0.4%, Argentina was down 0.6% and Venezuela was closed 2.2% lower, according to Economatica. Colombia was the only exception, closing up 1.9%. “The decision was not a surprise. However, markets are a little disappointed, since they considered the action as insufficient to reduce financial costs and relief pressures in the economy,” says Moody’s.
LatAm Hit by Fed Move (1)
Latin American indices closed lower Tuesday across the board as the market reacted poorly to a stingy 25bp rate cut from the Fed. Mexico’s Bolsa led the losses with a 2.7% drop. The Ibovespa was down 1.4%, Peru’s IGBVL dropped 0.4%, Argentina was down 0.6% and Venezuela was closed 2.2% lower, according to Economatica. Colombia was the only exception, closing up 1.9%. “The decision was not a surprise. However, markets are a little disappointed, since they considered the action as insufficient to reduce financial costs and relief pressures in the economy,” says Moody’s.
Moody’s Rates St Vincent
Moody’s has assigned a B1 mark to St Vincent and the Grenadines, the first-ever sovereign ratings for the eastern Caribbean nation. “The ratings balance St Vincent’s relatively heavy debt burden and highly vulnerable open economy with a history of stable policy environment and substantial international official financial support,” the agency says. “The macroeconomic environment is stable.” Debt as a percentage of GDP is on the decline, but must reduce further for an upgrade.
Liverpool, DF Line Mexico Offerings
Mexican retailer Liverpool is expected to sell MXP3bn-MXP4bn in local 2014 FRNs today via HSBC and Citi. And a MXP3.6bn offering from the Mexico City government is being readied for Wednesday via JPMorgan and Deutsche Bank. The DF offer will consist of 20-year fixed and 10-year floating rate notes, and is rated AAA(mex) by S&P. The remainder of notes authorized under a MXP4.5bn program is expected to be sold in an offering next week.