Mexico’s capital city announced this week the completion of a MXP22bn refinancing that saves it MXP1.5bn in upcoming interest payments and extends the average debt tenor beyond 30 years, from nine. The debt is mostly in loans with commercial banks, and includes a facility with a 40-year life. The city’s new lenders are BBVA Bancomer, Dexia Credito Local Mexico and Goldman Sachs, which beat out 10 other competing bidders. Meanwhile, the city has prepaid around MXP12.5bn to Santander, Banorte and Afirme, with the remaining prepayments to come in the next two months.
Category: Regions
Posted inDaily Brief
Bear Raises Jamaica, Cuts Barbados
Bear Stearns has raised its credit outlook on Jamaica, after the technicals improved following the amortization of a $225m bond, and recent amortizations of locally-issued US-dollar-indexed bonds. Also, the JLP Party, expected winner in the September 3 elections, is expected to introduce market-friendly policies. Barbados’ still-high current account deficits and limited flexibility earned it a downgrade.
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Central America/Caribbean Debt Rebounds
Central American and Caribbean sovereign debt returned 0.51% in August, bouncing back from a July loss of 1.15%, according to Bear Stearns. The bank considers the performance “very respectable” given the volatility in the global credit markets. It sees the best potential in Panama, based on a strong credit and growth story, and in Guatemala, where says bonds are cheap on a relative value basis. Bear also favors the region’s prospects for weathering a slowdown in the US economy. “Our US economics team does not foresee a recession in the US, though a slowdown is certainly possible. If this plays out, we believe that the Central America and safe from a credit standpoint,” the bank says. Outperforers in August include higher-quality names like Bahamas, Panama, Barbados, and T&T. Jamaica also outperformed following a $225m bond maturity. Grenada and Belize underperformed, as did, to a lesser degree, Guatemala and El Salvador.
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Mexico’s Sigma Files MXP5bn Bond Program
Sigma Alimentos, a Mexican dairy producer, filed with the CNV a 4-year program to issue up to MXP5bn in certificados bursatiles, whose proceeds will go to pay down debt, fund operations and general corporate purposes. Banc of America Securities is the sole lead bank on the filing. In July Sigma acquired Mexican Cheese Producers, a company based in Wisconsin that sells cheese products targeted at Hispanic minorities.
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Condor Acquires Stake in Peru Copper Project
Canada’s Condor Resources has agreed to acquire a 75% interest in the Ocros porphyry copper project in northern Peru. Condor will pay $875,000, half in cash and half in shares, and incurs exploration expenditures of at least $4m over a five year period. It also retains a right of first refusal on the vendor’s 25% interest.
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Toyota Unit Files MXP5bn Local Bond Program
Toyota Financial Services de Mexico, the financing arm of the Japanese carmaker, filed Tuesday a MXP5bn 5-year revolving certificados bursatiles program to fund its operations in the country. Toyota says it has the option of issuing in pesos or UDIs, with the possibility of linking a deal to the performance of other currencies. Scotiabank and Banamex are named on the program, which is being reviewed by the CNV.
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Citi to Advise Nafinsa on FARAC Auctions
Nacional Financiera, Mexico’s development bank and the institution charged with overseeing the divestiture of several toll road concessions into the hands of the private sector, has hired Citi to advise it on the various duties related to the auction process, including data room, valuation, and the auctions themselves. As such, Citi is barred from backing any of the bidders that would look to participate in the auctions. Citi is understood to be being remunerated accordingly for its services and the opportunity cost of not participating in the auctions, of which there are up to 10 more to come. The first round went to bidders ICA and Goldman Sachs Infrastructure Partners, backed by Banco Santander, Dexia and NordLB.
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FEMSA Taps Borrego for Corporate Affairs
Mexican beverage company FEMSA has named Genaro Borrego Estrada as director of corporate affairs, reporting to president José Antonio Fernández Carbajal. A former senator and Governor of Zacatecas state, he will oversee the company’s relations with media and government and non-government organizations for Femsa’s worldwide operations.
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Colombia Taps BBVA To Advise On Power Auction
Colombia’s electricity authority has named BBVA as advisor on an auction to provide 800MW of additional capacity to the country’s grid. Other phases for additional capacity are expected beginning next year. Bidders, expected to include utiltities, IPPs and energy-focused private equity funds, will pitch a fixed price for dispatched thermoelectric generation.
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Colombia Targets $2.5bn in TES Buyback
The Colombian Treasury will today target COP5.4trn in TES bonds through a repurchase of the paper two months before maturity. Julio Torres, head of public credit, tells LatinFinance that he expects not more than 10%-20% participation, based on the history of these transactions. He adds that the government will save 2.75% by depositing the bonds into the Central Bank. The 12% notes come due November 9. The deal is viewed as a move to free up portfolios so investors buy deals like Ecopetrol’s IPO, which becomes available to the public on September 25. “The operation should generate some fiscal savings but is also an attempt to inject liquidity into the market, which should, in our view, lower the yield on outstanding TES as institutional investors are likely to use the funds to buy other TES,” says Goldman.