A better inflation outlook should prompt Mexico’s Central Bank to leave monetary policy unchanged August 24, according to Credit Suisse. “The potential for lower growth in the US in the second half of 2007 and 2008 arising from the distress in the mortgage market may lead to an improvement in the balance of risks on inflation in Mexico, via lower growth and potentially lower commodity prices,” says the shop. “Inflation developments in Mexico in recent weeks have been generally neutral to positive,” it adds.
Category: Regions
Posted inDaily Brief
TGI Sits Back and Eyes Market
Colombia’s TGI, which in July announced plans to issue $900m in bonds due 2017, is unlikely to make it out before September. Barring a radical improvement in market conditions, which so far this week have only gotten worse, the gas distributor is understood to eyeing a September timeline or later, if the demand is there. Investor interest in the debut issuer is heard to be strong, based on a positive outlook for Colombia. But placing such a large issue will be challenging, especially if conditions remain soft. ABN AMRO is leading the offer.
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Ecuador Reported Paying $135m coupon
As expected, Ecuador paid a $135m coupon on external debt yesterday, according to reports from Dow Jones, making this the fourth coupon payment made by the South American country this year. Payments on its external bonds total $331.4m since President Rafael Correa took office in January, pledging to renege on Ecuador’s foreign debt. At the beginning of this year, investors questioned Ecuador’s willingness to pay in light of Correa’s comments. More recently they are starting to question the country’s ability to pay given a ramp up in public spending and a surge in the country’s borrowing costs amid the global liquidity crunch.
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Panama’s Grupo Mundial Raises $70m Via IFC
The IFC has taken a 7% stake in Panamanian financial conglomerate Grupo Mundial worth $30m and is lending the firm $40m in a 10-year loan. The transaction, which begins to amortize in year five, pays Libor plus 175bp. The financing follows a $25m 10-year loan at Libor plus 150bp provided in April by the IFC, whose proceeds are being used to expand the group’s mortgage business. “We weren’t only in search of the financial resources, but a partner to provide technical assistance and the transfer of best practices,” Rodrigo Diaz, CEO of Grupo Mundial, tells LatinFinance. Pablo Vera, the transaction leader at the IFC for this deal, says the bank is looking to be more active in Central America, and that its general positive view of Panama helped cut the margin on the loan. Proceeds are destined to boost Grupo Mundial’s insurance and banking expansion in Colombia and Central America.
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CFE Heard Mulling Mega Loan
Mexico’s CFE is also heard to be considering raising a jumbo dollar loan, for up to $3bn. The state-owned power company must get approval from the ministry of finance for the transaction, which market participants say has already been mandated to a local bank and a European shop. Since another Mexican agency, Pemex, is still wrapping up documentation on a $2.5bn refinance, Hacienda may opt to wait for a clearer market. CFE typically commands very tight margins but the LatAm bank market is braced for spillover from the global credit crunch.
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Mexico’s CFE to Price MXP1.5bn
Mexico’s Comisión Federal de Electricidad will today price MXP1.5bn in 2017 certificados bursatiles, marking the first sizable issue to hit the local market in several weeks. The offering, of a typical size for CFE, has an average life of five years and will be priced over 3-month Cetes, with guidance in a 25bp-28bp range, according to an executive close to the deal. The 91-day Cetes priced at 7.44% Tuesday, according to the Central Bank. The offering is backed by a senior unsecured term loan from BBVA Bancomer, sole bookrunner on the deal. Through the loan, CFE provides senior unsecured pledges of interest and principal payments to a trust. Moody’s assigned a Baa1/Aaa.mx rating to the deal. CFE is the Mexican government’s agency responsible for the strategic development, construction, operation, and maintenance of Mexico’s electricity system.
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Waldo’s Heard Flexed Up
Waldo’s, the Mexican low-end retailer, is heard to have flexed up the price on a $120m loan in the wake of a generalized re-targeting of yield requirements by banks lending to highly leveraged borrowers. For the $70m 5-year A-tranche the company is now offering Libor plus 450bp, from a previously announced 400bp, say bankers away from the deal. For the $50m 7-year B-tranche, the margin has moved to Libor plus 750bp, from 650bp. Flexing is relatively rare for the Latin market and typically lambasted by bankers not actually leading a loan that has price changes after going to market. However, there seems to be increasing support for price adjustment – common in the US loans market – especially during times of market stress. The up-front fee is heard to be at 100bp and Citi is leading. Bankers close to the deal said the Waldo’s now has $95m in commitments and that the deal is moving along well.
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Durango Extends Again
Mexico’s Corporacion Durango, the integrated paper and packaging company has again extended the deadline of its cash tender offer for any and all of its series B step up rate senior secured guaranteed notes due 2012. The new closing date is 1700 EST on August 17, from August 10 previously. As of last Friday, the firm had secured $370.5m in aggregate principal amount, or approximately 88.3%, of the outstanding notes. Merrill Lynch is dealer manager for the tender offer and consent solicitation. Global Bondholder Services Corporation is depositary and information agent.
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Marubeni Lenders Plot Year-End Takeout
The banks that have provided Marubeni Caribbean Power Holdings (MCPH) with a $310m bridge loan hope to take out the 1-year financing as early as the end of this year, according to bankers on the deal. MCPH, which belongs to Marubeni Corp, acquired all the shares of Mirant Caribbean Holdings, an independent power producer. Mizuho is leading with ING, Calyon and ABN AMRO as MLAs.
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Ontario Teacher’s Lends Lamosa $225m
Ontario Teacher’s Fund, whose private equity arm Teacher’s Private Capital manages $15.2bn in assets, has lent Lamosa, a Mexican retailer of home improvement products, $225m via second lien loan, according to bankers away from the deal. The margin is heard to be between 400bp and 450bp. The facility has a 7-year maturity, though the borrower must renew it at least two years ahead of the final date. Lamosa is also doing a $670m two-tranche 4.7-year average life loan via Scotiabank. The syndication is heard to be going well, with five MLAs, including BBVA, JPMorgan, Unicredit, and Comerica, and five arrangers, including Merrill Lynch and ABN AMRO. Proceeds of the financings are being use to acquire Porcenalite, a tilemaker.