GISSA Heard Grappling with Counterparties

Grupo Industrial Saltillo (GISSA) is heard enmeshed in difficult talks with derivative counterparties to sort out positions in FX-related derivatives that moved against the Mexican corporate, say people familiar with the company’s status. An equity analyst covering the credit says there appears to be a disagreement on the values the company owes its counterparties. The industrial group said in November it reported net loss of MXP506m, largely due to derivatives markdowns. It said at the time that it was being told by investment banks to close outstanding derivatives positions. The company also saw its Ebitda shrink, leading it to trip leverage covenants on some of its bank debt. In February, GISSA said it managed to renegotiate MXP1.34bn in certificados bursatiles, extending the tenor on the notes another 10 years and restructuring the interest payment schedule to include a 3-year no-interest period. The note series are the GISSA 04-2 and 04-3, due 2019 with step up interest payments that incentivize the company to call the notes as early as possible. While it has yet to report its Q4 figures, GISSA is likely to have more bad news, and will inevitably have to renegotiate terms on its bank debt, say loan market participants. A GISSA finance official did not return calls.