Category: Regions

US financial services institution Prudential Financial has signaled its confidence in Mexico’s continued stability and economic growth with the announcement that it has set up a life insurance business, Prudential Seguros Mexico, and will be opening a bank south of the border later this year or next. Prudential will be pursuing a license to set up a financial group in Mexico under which all its financial businesses will operate. The US company already owns an investment management firm in Mexico (Prudential Apolo) and has a 50% stake in a private pension fund administrator, Afore XXI. It is looking to increase its stake in the administrator or buy another. Prudential has insurance operations in Brazil and Argentina.

Mexico’s largest telecoms operator Telmex, owned by local entrepreneur Carlos Slim, may be ready to buy the Latin American assets of US company Verizon, the country’s largest telephone provider. The US operator is looking to sell its assets in Venezuela, the Dominican Republic and Puerto Rico for an estimated $4 billion. Verizon owns 28.6% of CANTV in Venezuela, 100% of Verizon Dominicana (ex-Codetel) and 52% of Puerto Rico’s Telephone. The purchase of CANTV by Telmex will gain the Mexican operator entry into the last important South American market in which it has yet to have interests. Telmex already has stakes in Argentina, Brazil, Chile, Colombia and Peru and its subsidiaries in these countries provided 25% of the Mexican company’s earnings last year.

Mexico cut the costs of its debt financing by issuing $3 billion of new global bonds, Friday, to buy back $2.9 billion of higher-coupon foreign-currency bonds maturing between 2007 and 2031. The refinancing was well below the $5 billion expected by the market, surprising analysts who had anticipated greater demand. The new global bonds, due 2017, were sold at a yield of 5.736% and a coupon of 5.625%. As well as reducing its debt servicing costs, Mexico is looking to improve liquidity of its bond market by buying back lesser-traded instruments and providing the country’s largest foreign-currency benchmark bond to date. The deal was managed by Goldman Sachs and Morgan Stanley.

Following the successful sale last week of its 85% stake in Grupo Aeroportuario del Pacifico (GAP), the country’s largest airport operator, the Mexican government says it is planning to follow it up by selling its 49% share in Grupo Aeroportuario Centro Norte (GACN) before the end of this year. The government is considering an offer by local constructor ICA which owns the balance of GACN. Mexico successfully raised $870 million from its largest IPO in 10 years with the sale of GAP.