Mexican Wireless Hangs Up on Bonds

Mexico’s Grupo Iusacell says it will stop servicing dollar bonds while it seeks to restructure its debt. It will continue to service its MXP denominated paper. Company officials did not return repeated calls, but a sellside analyst watching the credit estimates the company’s 3 tranches of notes total close to $400m. A 2011 note pays Libor plus 400bp, while another two notes due 2012 and 2013 pay 10%, says the analyst. The problem, claims the company, was generated by a depreciation of the MXP against the dollar, likely a euphemism for an FX derivative-related loss. Iusacell is Mexico’s fourth largest cell phone operator by customers. Iusacell’s long term debt stood at MX9.9bn at the end of 2008, of which MXP6.8bn is in the form of bonds, according to its most recent financial statement.