Category: Regions

Ford Motor has agreed to sell its Nuevo Laredo, Mexico, power transfer unit plant to Linamar for an undisclosed amount. The plant, controlled by Ford subsidiary ACH, employs 500 people, and is the second Mexico sale by ACH this year. In April, it sold its fuel rail business in El Jurado. Both are part of a cost cutting plan.

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.

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.

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.

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.