Category: Regions

Mexico is planning to issue another catastrophe bond (CAT) early next year, this time to protect against hurricane damage. In May this year, it sold $160 million worth of CAT bonds as part of a $450 million insurance package to protect itself against the future cost of damage in the event of a major quake. This was the first time Mexico had issued such paper and the first time a developing nation had tapped the financial markets in this way. The new CAT bonds will cover the hurricane-prone regions on the Yucután Penisula and those along the Pacific coast.

South Korean steelmaker Pohang Iron and Steel Co (POSCO), the fourth-largest in the world, is to build a new plant in northern Mexico for $250 million, to supply the booming local automotive industry. The plant, to be built in Altamira, in the state of Tamaulipas, will produce galvanized steel sheet and should be ready by 2009.

Mexico’s car production in August was up 19.5%, compared with the same month a year ago. The rise was driven, yet again, by export demand for automotives, which increased by 38% in the month. Even domestic sales, which had been expected to drop, held their ground and rose by 0.3%. Exports of automotives have risen as foreign manufacturers expand their operations in the country to take advantage of cheaper manufacturing costs. The auto industry is an important component of Mexico’s industrial production, accounting for around 10% of its total output.

Mexican broadcaster Televisa is said to be considering heading up a new bid for US Spanish-language broadcaster Univision. Grupo Televisa lost out in bidding to a group of investors that included Texas Pacific Group and Thomas H Lee Partners. The latter bid $12.3 billion for Univision following the $12 billion bid by the Mexican broadcaster. Televisa will likely lead a group of US investment funds in the bidding as it is forbidden, by US law, to hold more than 25% of the capital of the company.

Mexico’s largest cement producer, Cemex, is to invest $49 million to build a new grinding and blending facility in the UK. It is due to be online by 2008. The plant, to be built near London at Tilbury, will have a capacity of 1.2 million tonnes a year. The company said the new plant will be “well placed to help meet demand for the cement required for new developments in the region and the sustainable construction challenges of the London 2012 Olympic Games.” Earlier this year, the company announced a $500 million global expansion program that will also see increased operating capacity in US, France and Latvia.

Mexico’s rate of inflation quickened in August, rising 0.51% to post cumulative inflation of 3.47% for the eight months through August, the highest level in six months. The monthly rise compares with an increase of 0.12% in August last year. The price rises were driven by increases in the cost of electric power and certain agricultural goods, according to the Central Bank. The Bank had forecast inflation of 3% for the year; most analysts are now predicting a rate closer to 3.4%.

The Mexican government will sell its remaining 49% stake in airport operator Grupo Aeroportuario Centro Norte (GACN) via a global secondary offering at the end of October to raise around $300 million. Accival, part of Citigroup, will act as placing agent. In April this year the government rejected an offer by local construction firm ICA to buy its holding for $270 million and chose instead to offer it for sale via the stock exchange. ICA already owns 51% of the company and therefore had the right to bid for the outstanding shares. GACN has operations in 13 locations throughout the country, including Monterrey and the resort of Acapulco. In February the government raised $870 million from the sale of Grupo Aeroportuario del Pacifico (GAP), the country’s largest airport operator. The sale was the government’s largest IPO in 10 years.