Javer Hedges FX Exposure

Mexican homebuilder Javer says it has hedged proceeds from its $180m 5-year bond placed at the end of July. Announcing H1 results, Javer says that 100% of the coupons have been hedged at an exchange rate of MXP13.23/USD. Half was swapped into variable MXP at an average rate of around TIIE+435bp, while the rest was fixed at an average in MXP of around 14.23%, says the borrower. “As of today 50% of the principal amount of the notes has also been hedged with one year forward contracts that were entered into at spot rates of between MXP12.86 and MXP13.16 per US dollar plus the appropriate forward points,” says Javer. The company adds that it plans to roll these forward until the maturity date of the notes. The hedging was executed via 6 counterparties, says Javer, without naming them. “Through these counterparties we have exposure thresholds in excess of $32m to cover potential negative mark-to-market exposures in the derivative portfolio,” says the issuer. The privately held builder of entry-level and middle-income housing priced the 2014 bond issue at par to yield 13%, in line with 13% area guidance. Bank of America-Merrill Lynch and Credit Suisse underwrote the first-time Ba3/BB minus deal. Javer adds that as of June 30, it maintained derivatives positions to hedge 100% of its currency exposure and part of the TIIE exposure related to a syndicated loan. The $55m facility was hedged through a cross-currency swap held through 2 financial institutions at an exchange rate of MXP10.427. A MXP154m tranche, was hedged for interest rate exposure through an interest rate swap at a fixed 12.77%.