Category: Regions

Rating agencies have affirmed their view of Merrill Lynch Mexico, despite monster losses at the parent. Fitch cut Merrill Lynch and its subsidiaries and kept it on negative outlook following revised earnings for third quarter 2007. “The size of trading losses and unrealized losses unexpectedly overwhelmed the performance of the consolidated firm,” says the agency. “The size of Merrill Lynch’s CDO position and subsequent loss reveal deficiencies in risk management. Fitch anticipates liquidity and pricing challenges to prevail in the market over the intermediate term potentially resulting in lower revenues (in select products/services), investment write-downs and/or fewer principal trading opportunities,” it adds. It affirmed a Triple A long-term senior rating, with a stable outlook, on Merrill Lynch Mexico, Casa de Bolsa. S&P also affirmed a Triple A and says the loss will not impact.

Rating agencies have affirmed their view of Merrill Lynch Mexico, despite monster losses at the parent. Fitch cut Merrill Lynch and its subsidiaries and kept it on negative outlook following revised earnings for third quarter 2007. “The size of trading losses and unrealized losses unexpectedly overwhelmed the performance of the consolidated firm,” says the agency. “The size of Merrill Lynch’s CDO position and subsequent loss reveal deficiencies in risk management. Fitch anticipates liquidity and pricing challenges to prevail in the market over the intermediate term potentially resulting in lower revenues (in select products/services), investment write-downs and/or fewer principal trading opportunities,” it adds. It affirmed a Triple A long-term senior rating, with a stable outlook, on Merrill Lynch Mexico, Casa de Bolsa. S&P also affirmed a Triple A and says the loss will not impact.

Mexican auto parts maker Sanluis Rassini is out with guidance of 11.5% area on a $275m 2017 senior unsecured bond issue. Proceeds will be used to refinance some $240m in debt. The issue via Morgan Stanley is rated B2 by Moody’s and B minus by Fitch.

Mexican mortgage company Hipotecaria Su Casita says bondholders representing 74.5% of $150m bonds due 2016 have tendered bonds in a cash offer that expires November 6. Bondholders representing $111.7m of Su Casita’s 8.50% senior notes due 2016 had tendered their offers and given consent for changes in the terms by Tuesday’s cutoff. Those participants will get a payment equal to 105.5% of face value, including a 3% of face value consent payment. Proceeds from a certificados bursatiles issue due 2012 will cover the buyback. Merrill Lynch is dealer manager.

Southern Copper Corporation has approved a new investment program in Peru to replace a plan that had been agreed for Mexico. The $2.108bn plan covers the development in Peru of the Tia Maria SX/EW copper project, the Toquepala concentrator expansion, the Cuajone concentrator expansion, the Ilo smelter expansion and the Ilo copper refinery expansion. “This investment would permit the company to increase its copper production by 270,000 tons per year by 2011, which represents 39% of the current production level,” says the firm.

UBS Pactual has cut its equity valuation on Mexico’s Axtel to neutral based on the fact that it is trading at a premium to its peers. “Based on our estimates, Axtel is trading at an estimated 8.7 times 2008,” says UBS. “Stock is up 174% year-to-date, and four-fold in the past 12 months,” it adds. This compares to just 21% for the IPC index year-to-date, and 31% for Telmex and 47% for America Movil. Competition and technology are seen as the main risks, as cable providers ramp up triple-play offers. Upside risks include M&A and number portability. “At the current price, and given the risks, we believe Axtel is fairly priced,” says UBS.

Southern Copper Corporation has approved a new investment program in Peru to replace a plan that had been agreed for Mexico. The $2.108bn plan covers the development in Peru of the Tia Maria SX/EW copper project, the Toquepala concentrator expansion, the Cuajone concentrator expansion, the Ilo smelter expansion and the Ilo copper refinery expansion. “This investment would permit the company to increase its copper production by 270,000 tons per year by 2011, which represents 39% of the current production level,” says the firm.

UBS Pactual has cut its equity valuation on Mexico’s Axtel to neutral based on the fact that it is trading at a premium to its peers. “Based on our estimates, Axtel is trading at an estimated 8.7 times 2008,” says UBS. “Stock is up 174% year-to-date, and four-fold in the past 12 months,” it adds. This compares to just 21% for the IPC index year-to-date, and 31% for Telmex and 47% for America Movil. Competition and technology are seen as the main risks, as cable providers ramp up triple-play offers. Upside risks include M&A and number portability. “At the current price, and given the risks, we believe Axtel is fairly priced,” says UBS.