More Mexican Corporates Suffer Derivs Losses

Rating agencies have downgraded Mexico’s Gruma and Posadas amid derivatives related losses. A rating agency official tells LatinFinance that this may just be the tip of the iceberg, as analysts work overtime to reassess Mexico’s corporate balance sheet. Tortilla maker Gruma was demoted BBB minus to BB+ and BB, respectively, by both Fitch and S&P, including its $300m perpetual. Both agencies also assigned a negative outlook after Gruma has reported a $684m mark-to-market loss. “Derivative positions expose Gruma to large potential losses over time as these instruments roll-off during the next three years,” says Fitch. Gruma has approximately $140m in cash and committed credit facilities, and no significant maturities until July 2010, it adds. At June 30, total on-balance-sheet debt reached $620m, almost entirely dollar denominated, including the perp, a $150m syndicated credit facility due 2010 and a $40m revolver due 2011.It also has an 8.62% stake in Banorte, valued at approximately $275m, says Fitch. “Further volatility in the currency markets and/or margin calls from counterparties could severely affect the company’s financial profile,” says S&P analyst Enrique Gomez Tagle. Meanwhile, S&P axed hotel operator Grupo Posadas to BB minus (negative) from BB, after a $38m FX swap related loss. “The rating action also reflects the company’s financial policy, which has proven to be more aggressive than we expected,” says S&P analyst Monica Ponce. Other analysts say that corporates in Mexico and Brazil look particularly vulnerable to the crisis.