Category: Regions

Citi has upgraded to buy Grupo Financiero Inbursa on improving business conditions and solid operating performance. “Since mid August (when the Mexican market began its recovery) to date, Inbursa has underperformed the MSEI by 23.6% and since the beginning of July, Inbursa’s share price return has been in line with the market’s (+2.0%),” says Citi. It also raised Copel to hold from sell, based on recent performance and adjusted the price target to 33 reais a share.

Eton Park, a New York-based multi-strategy fund and Axis, a Mexico City-based private equity shop, said Wednesday they have started a new company called Navix that will specialize in LatAm structured lending. The company is registered as a SOFOM, or specialty finance company that has raised $100m in equity finance. The next step will be to lever up its balance sheet with loans and credit lines and begin structuring asset-based loans to mid-market companies. “The needs of most Mexican corporates are underserved by the local financial institutions,” Gonzalo Gil White, managing partner at Axis and the CEO of Navix, tells LatinFinance. Navix will target a variety of sectors initially in Mexico, but very likely in other countries like Brazil eventually as well. One of its focuses includes short-term project and working capital loans for energy sector companies. Eton Park is the majority equity holder in the venture.

Mexican state oil company Pemex priced a $1.5bn 2018 bond issue at 99.316 with a 5.75% coupon to yield 5.84%, or 128bp over UST. A $500m retap of 2035 6.625% notes priced at 103.697 to yield 6.339%, or 150bp over UST. Demand was at least $4bn on the 2018 notes and $1bn on the 2035, according to bankers on the deal. Moody’s rated the bonds Baa1, and S&P BBB+. Proceeds will go towards the repurchase offer of notes announced last week. Lead managers are Credit Suisse, Deutsche Bank and Merrill Lynch.

Mexican home builder Urbi plans to raise $300m by selling 83.5m new shares in a local and international stock offering. Majority owners from the Perez Roman family and four other stock holders will also sell an additional 10m shares in a secondary offering. Based on a share price of MXP41.02, Urbi expects to raise $354m through both. BBVA Bancomer and UBS will lead.

Bullish for the overall LatAm macro story is consumption from China, particularly of raw materials. Barclays says copper supply disruptions in Chile, Mexico and Peru have helped keep prices high, but longer term, Chinese consumption will be the driver.

Mexican oil company Pemex is preparing a new 10-year bond issue of “benchmark size” to raise funds to support its repurchase of up to $7bn in debt, according to bankers on the deal. It also plans to reopen its 2035 issue. The exact size and timing of the sale still remains to be set. Deutsche Bank, Credit Suisse and Merrill Lynch are coordinating the offer. Pemex has launched a series of tender offers to buy back up to $7bn in outstanding bonds in exchange for cash, as part of an ongoing liability management program. Pemex’s overseas financing unit, Pemex Project Funding Master Trust, is offered to repurchase dollar-denominated bonds due 2011, 2014, 2015, 2018, 2022, 2023 and 2027 – totaling nearly $6bn. In a second tender, it is offering to buy back a portion of other fixed and floating-rate dollar bonds outstanding – due 2008, 2009, 2010 and 2012 – up to a maximum of $1bn, also for cash. The offer expired Tuesday, creating synthetic demand for a new issue this week. Credit Suisse and Deutsche Bank are dealer managers.

A consortium led by Citigroup’s Banamex appeared to have the upper hand in a bidding war for Mexican airline Aeromexico late Tuesday. Banamex and rival bidders the Saba family each upped their offers Tuesday after Mexico’s deposit insurance agency IPAB announced it would accept the existing MXP1.84bn Saba bid if no better offers came. In a statement to the Mexican securities regulator Tuesday afternoon, the government said it would accept the Banamex offer – $171m cash plus warrants reflecting the future value of Aeromexico, totaling about $206m – unless something better comes up by Wednesday afternoon.