Foreign direct investment (FDI) in Mexico rose 28% in the first half of 2010 from a year earlier to $12.24bn, according to the country’s economy ministry. The figure includes $7.36bn that Mexico received in FDI during the second quarter, a 34% increase from a year earlier, the Economy Ministry said in a press release. The leading country of origin was the Netherlands, accounting for $6.96bn, owed to the purchase of Femsa’s beer business which closed during the second quarter. The US was second with $3.51bn. Manufacturing industries received 63% of FDI in the first half, reflecting what many hope is a strong export-driven recovery.
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Vitro Puts Off Debt Offer
Mexico’s Vitro has delayed Until September a new consent solicitation it had hoped to put to bondholders in August, it says. The glassmaker finds itself still “in conversations with certain relevant creditors,” it says in a statement, as it draws up the final terms and conditions on a new proposal. Vitro plans to offer a package including new instruments “which represents a significant increase in creditors’ recuperation versus the historic price levels of the bonds,” it says, to holders of its 8.625% 2012, 11.75% 2013 and 9.125% 2017 notes. Earlier this month, Vitro revealed that creditors had turned down a $1.26bn restructuring proposal submitted in July, which involved issuing three series of new bonds plus a $75m cash payment. The new debt offered in that proposal consisted of $500m 8-year bonds paying 3% and increasing 100bp per year, $350m in amortizing 7-year bonds paying 3% the first year, 4% in the second and 8% in subsequent years, and $80m in 10.5% 5-year convertible notes that are automatically swapped into shares if they haven’t been paid down by maturity. Vitro defaulted in 2009 as the global recession hurt revenue and the company suffered more than $300m in derivative losses.
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Banamex to Issue Local Bond
Banamex is expected to issue a dual-tranche domestic bond deal on August 27, according to a regulatory filing. The transaction will be for up to MXP7.5bn, with the issuer able to choose from a 7-year floating-rate note and a 10-year fixed-rate bond, according to a release by S&P. The bonds have a AAA rating on a national scale. Proceeds will be used to improve the bank’s liquidity profile and grow its business.
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Celulosa Arauco Plans Bonds
Chile’s Celulosa Arauco says it is planning to issue up to UF5m ($211m) in local bonds in 2 pieces. The first tranche is due in 2018 and the second in 2020. Each series is expected to have a 3.25% coupon. The company has not said which banks will lead the sale or what it will use proceeds for.
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Brazil Development Bank Seeks Bond Return
Brazilian development bank Banco do Nordeste do Brasil (BNB) is planning to raise funds in the cross-border DCM, according to bankers in that market. A size of up to $600m is expected from the government-owned regional lender, which has not sold a bond internationally since 1997, according to Dealogic data. As the larger BNDES state development bank began to do in 2008, the BNB is looking to return to international sources of funding as its lending business expands. Deutsche Bank is heard among the shops with the mandate.
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ISA Signs Acquisition Loan
ISA signed a loan with BBVA for $150m, with proceeds going to finance the purchase of 60% of Cintra Chile’s shares, according to a regulatory filing by ISA. This does not cover the total cost of the shares, as part will also be covered by ISA’s own capital from a share issue the Colombian electricity transmittor did last year, says an ISA spokeswoman. She declines to disclose additional details about the loan. The price of the share purchase had been heard to be $300m, though she adds that it is yet to be determined. The Colombian infrastructure company, which is attempting to diversify away from energy, in February agreed to take a 60% stake, though this was delayed because of the earthquake that hit Chile. ISA also has an option to takeover the remaining 40% stake. Spain’s Grupo Ferrovial is the seller of Cintra, a road developer that recently completed the 900km Ruta 5 toll road.
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Investor Group Takes Mexicana
Tenedora K, a company formed by Mexico’s Grupo Industrial Omega and Grupo Arizan, is acquiring a 95% stake in Mexicana de Aviacion, the two companies say, without disclosing what they are paying for the bankrupt airline. A source in the pilots’ union says the final price and conditions are still being discussed. The pilot union will keep its 5% stake. Advent International is acting as an intermediary, says a spokesman at the private equity shop, adding that the shop is not taking an equity stake in the airline. The two groups, who formed Tenedora K specifically for the acquisition, do not disclose the sellers, though Grupo Posadas is one, saying separately that it sold 30% of the airline’s holdco. Omega and Arizan did not respond to requests for comment. Omega is the holding company for companies including manufacturer Holzer and real estate operators Inmobiliara Coapa Larca, and Inmobiliara Castellanos. Arizan is primarily involved in real estate.
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Vale Denies Potash Play
Vale is rumored among suitors for Potash Corp as it defends itself from takeover by BHP, but the Brazilian miner denies it is interested in the Canadian fertilizer producer. Rumors of Vale buying or negotiating a purchase of any fertilizer maker are “completely unfounded,” it says in a statement. Vale and China’s Sinochem had been rumored as possible alternative buyers for the Potash, which officially rejected BHP’s offer to acquire the company for $130 a share, or about $40bn, saying it expects better offers from other parties it is talking to. Potash does not identify the other potential bidders. US-based equity research firm Dahlman Rose believes the Canadian government would not likely allow a takeover by a Chinese-controlled company, but says Sinochem could pursue a minority stake in Potash to try and block BHP. “Because Vale does not have BHP’s balance sheet strength or size, we believe that a bid by Vale would likely involve backing from another company. However, we believe that a Vale takeover of Mosaic is more probable,” the firm says. An equity analyst who covers Vale says it is likely that it inquired about Potash, but does not believe an offer is on the table. “Vale’s management has to at least take a look at the company as a duty to its shareholders,” he says. A Vale spokeswoman says the company does not comment on market rumors. Potash has hired Bank of America Merrill Lynch, Goldman Sachs and RBC to advise on alternatives to the BHP offer.
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IMF Positive on DomRep
An IMF mission that visited the Dominican Republic to discuss reviews of the stand-by arrangement approved in November, says the country has met all performance criteria and structural benchmarks as of the end of June and, as a result, has raised its expectation of GDP growth. “Real GDP recovered rapidly and is estimated to have grown by 7.5% H1 2010 (year-on-year), while headline annual inflation remained below the central bank’s target of 6%-7%. Core inflation (which excludes food and fuels) reached only 3.5% (year-on-year) for H1 2010,” the IMF says. “Against the background of the strong and broad-based expansion projected real GDP growth for 2010 has been revised upward to 5.5%-6.0%.”
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LatAm Bonds See Inflows
LatAm bond funds have received $9.8bn in inflows year-to-date, according to Barclays, which is using EPFR data. Flows to Brazil accounted for $3.0bn. In the week ended August 18, inflows to LatAm bonds were around $100m. As for performance, EM debt funds gained 1.28% in the week ended August 19 and are up 11.32% ytd, Lipper says. Global income funds gained 0.66% in the week and 5.90% so far this year, while international income funds gained 0.84% in the week and 4.19% ytd.