Category: Regions

Mexico’s Cemex is on the road in the US with a dual-tranche senior perpetual bond issue through Barclays and JPMorgan, expected to weigh in at up to $1.5 billion. Investor meetings run through this week and pricing is likely on Monday December 11. The quasi hybrid issue is structured for accounting purposes, though it gets no equity credit, and proceeds are to help fund the acquisition of Australia’s Rinker, which is still being negotiated. There are two pieces, one callable after year five, the other after year 10, and both step up significantly (around 300bp) if not called. The transaction is rated BBB by Fitch and BBB minus by S&P and size is to be decided, though Fitch assumes up to $1.5 billion. The perpetual will be issued through an SPV and guaranteed by Cemex, Cemex Mexico and New Sunward Holding. Rinker has rejected Cemex’s unsolicited $13 billion takeover bid, for which Fitch put its rating on negative watch. Cemex, meanwhile, is at an advanced stage of syndicating a $9 billion loan through its Spanish unit to pay for the deal.

Augustín Carstens, Mexico’s new finance minister, announced further appointments to his team at the finance ministry Monday. Carstens will be joined by three deputies: Alejandro Werner, formerly chief economist replaces Alonso García Tames as deputy minister. Ernesto Cordero becomes deputy minister in charge of spending, and Fernando Sanchez Ugarte was named deputy minister for income. Gerardo Rodriguez stays on as head of public credit.

Mexico’s new president, Felipe Calderón, was inaugurated Friday in a ceremony kept short by recent protests from opposition lawmakers in Congress who threatened to disrupt the day. Calderón inherits a country with escalating social and political tensions and analysts are watching to see what line he takes regarding law and order. One of his first acts was to sign an austerity decree which will, reportedly, save the country $2.3 billion in spending next year. The decree allows for a 10% cut in the salary of the president and other government ministers. The president also designated former energy minister Jesús Reyes Heroles González as the new head of state-run oil company Petróleos Mexicanos (Pemex).

Honduras has awarded two of its international fuel-supply concessions to Conoco Phillips of the US and Mexico’s Gas del Caribe. From the start of next year, Conoco Phillips will supply gasoline and diesel, while Gas del Caribe will provide LPG to meet Honduras’ fuels needs in these areas and save the country around $55 million, according to the government. Concessions to supply kerosene, aviation fuel, and bunker were not awarded. The government will now have to negotiate with oil companies currently operating in the domestic market, such as Texaco, Esso, Shell and local firm Dippsa to rent storage and distribution facilities. The multinationals will be given notice of the date by which they must stop importing fuel to the country and are likely to file for compensation against the government.

Figures released by Mexico’s finance ministry Thursday show that the country has brought down its public foreign debt, since the end of last year, by $12.5 billion to $53.2 billion as at October. Meanwhile, net public domestic debt rose by 152.5 billion pesos ($13.9 billion) during the same period as the government set about its program of exchanging foreign for domestic debt. The changes in its debt profile will help protect Mexico against external shocks.

Mexico Tuesday successfully swapped €493.8 million ($651 million) of euro-denominated foreign debt for domestic debt, with the exercise of its (XWE) series of warrants enabling investors to exchange the securities (UMS bonds) for peso debt (M bonds). Warrant holders exchanged euro-denominated bonds maturing 2008 to 2017 for 8.59 billion pesos of local-currency bonds due 2023. This is the last of four swaps that have seen Mexico exchange around $3 billion of foreign-currency debt for peso-denominated debt. Last November, Mexico sold three series of dollar warrants to enable investors to swap $2.5 billion of dollar-denominated securities for peso debt. Then in March this year, the sovereign sold warrants to swap euro-denominated bonds with a nominal value of €494 million into local-currency bonds due in 2023. Mexico is hoping to bring down its foreign debt-to-GDP ratio to around 6% by the end of this year from around 12% in 2000.

Australian building materials group Rinker has formally rejected the $11.7 billion bid (A$16.84 per share) by Mexican cement producer Cemex. In a press release issued this morning, Rinker’s board unanimously recommended to shareholders they reject Cemex’s offer, saying it was “opportunistic” and “far too low”. According to Rinker, the company has been valued by an independent expert at between A$20.58 and A$23.04 per share. Analysts expect Cemex to increase its bid.