Credit Suisse has kicked off coverage of Mexico’s Axtel with an Outperform recommendation on the 2017s and a market perform on the 2013s. “We think the Axtel ’17s offer attractive relative value with improving credit fundamentals, at a yield of 7.5%, whereas the upside on the ’13s will likely be limited by its callability (at 105.5 on 15 December 2008),” says the shop, which underwrote both Axtel deals. Axtel is Mexico’s second largest fixed telephony company with over 800,000 lines in service located across 19 cities as of April 2007, according to Credit Suisse.
Category: Regions
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Dresdner Bags Mandates For Demet, Mercantil
Dresdner has won mandates for two small corporate offerings. Demet, a Mexican homebuilder, is heard looking for $100m in 10-year non-call 5 bonds. Banco Mercantil do Brasil is also looking for a similar amount in 5-year senior amortizing notes. Both will roadshow starting in Asia and making up to eight stops in Europe and the US before pricing. This suggests placement with private banking clients, say bankers away from the deal.
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Fitch Sees Colombia Corporate Debt Growth
The private sector is expected to pump out at least COP5.4trn ($2.5bn) in debt this year, up from just over COP4.5trn in 2006, according to Gláucia Calp, senior director at Duff & Phelps de Colombia, an associate of Fitch Ratings. Diminishing needs from the government – COP83.7trn in TES issuance, down from COP85.0trn in 2006 – will leave local investors hungry, says Calp. Fitch estimates that pension funds can absorb close to COL2.7trn in private debt through 2007, and that they will need to buy an additional COP1.5trn in stocks to maintain participation in the portfolio. Calp adds that the COP5.4trn debt issuance figure is very conservative. Markets are still attractive for issuers, but local rates are rising. International investor participation in domestic debt markets is still very limited, says Calp. Fitch sees opportunity in financial institutions, especially as domestic credit starts to grow. It also pinpoints RMBS as mortgage portfolios grow, retail – which is starting to modernize – and telecoms, where mobile penetration is high, but internet use low.
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Merrill Keeps Ecuador Overweight
Despite concerns that the recent referendum strengthens President Correa’s hand, Merrill Lynch has reiterated an overweight on Ecuadorian bonds. “A resounding victory of the ‘yes’ vote does not imply that Correa will have a ‘blank check’ at the Assembly, as the electorate has proven to be very volatile,” says the shop. “The cause of political reforms is likely to keep the government from seeking a debt restructuring. Oil prices continue to support the ability to pay,” it adds. Merrill says that the ensuing political battle will likely keep the government away from debt issues. It adds that Correa and Economy Minister Patiño have moved away from their initial strategy to unilaterally restructure external debt. “The government learned of the difficulties of restructuring the debt . . . [and] opted to pick its battles and give priority to the political reform,” says Merrill. However, it warns of a likely agitated political process that could extend 12-18 months.
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PPL Exits Bolivia
US power and light company PPL agreed to sell its Bolivian power subsidiary, which corresponds to around 3% of its global business, to a group headed by the company’s management and employees. The value of the sale was not disclosed. PPL’s president Rick Klingensmith says he’s weighing offers on his other Latin American assets in El Salvador and Chile.
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Digicel Kicks Off El Salvador Coverage
Digicel, the fast-growing Caribbean telecom, has expanded into Central America by offering GSM mobile services in El Salvador. The firm sees CentAm as its next big opportunity and already has a license in Guatemala. El Salvador has a population of 7 million with mobile penetration of approximately 33%, says Digicel. The country’s mobile market continues to enjoy sustained growth with mobile phones overtaking fixed lines service in 2002, it adds.
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Colombia’s Zuluaga Sees $20 Billion For Infrastructure
Oscar Ivan Zuluaga, Colombia’s finance minister, expects to see an average of $5 billion in annual investments in infrastructure, excluding oil, between now and 2010, and identified this as one of the centerpieces of the administration’s national plan for development in the coming years. “This provides tremendous possibilities for investment,” he said, speaking to a group of strategists, investors and other market participants in Washington, DC and in New York via teleconference. He also expects the administration to bring unemployment down to 8.5% from the current 12%, and provide the entire population with full basic coverage in education, health and basic sanitation services. Poverty, he predicts, will fall to 39% in 2010 from 45% today.
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Ecuador Says “Yes” To Constitutional Reform
Ecuador’s president, Rafael Correa, was given the backing by an overwhelming majority of the population to set about reforming the Constitution. Over 78% of Ecuadorians voted “yes” in Sunday’s referendum to establish a Constituent Assembly, according to pollster Cedatos-Gallup. Only 11.5% of those polled said they had voted against the proposal. Setting up the Assembly is the first step in a process that will limit the power of Congress and ultimately benefit the poorer levels of society, according to the Correa. However, critics have accused the president of seeking to consolidate power and of following the path of President Hugo Chávez in Venezuela.
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IFC Supports Mexican Infrastructure
IFC, the private-sector arm of the World Bank Group is investing up to $50 million for a 19% stake in Mexican infrastructure firm Infrainvest, a subsidiary of local constructor ICA. Atul Mehta, IFC’s director for Latin America and the Caribbean, commented: “IFC is partnering with ICA in Infrainvest through this equity investment in order to enhance the company’s ability to respond to Mexico’s growing infrastructure investment needs”.
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Slim Takes Number Two Spot
Mexican business tycoon Carlos Slim Helu, owner of Mexican telcos América Móvil and Telmex, has been named the second-richest man in the world by Forbes. Slim, the son of Lebanese immigrants to Mexico, moves ahead of US investor Warren Buffet and behind Microsoft’s Bill Gates. Slim is estimated to have personal wealth totaling $53.1 billion – not far behind the $56 billion amassed by Gates.