If Mexico is truly the place to be in Latin America in the next
few years, there will be no shortage of investment banking and
capital markets opportunities. So far this year there have
already been signs of increased equity and debt capital markets
This will mean greater competition for the largest banks,
particularly Banamex, which has again shown itself able to
offer the widest range of options for Mexican clients.
³In the last year we¹ve seen tremendous activity
compared to what we had two or three years ago,² says
José Antonio González, Citi¹s head of global
banking for Mexico. (Citi bought the Banamex Financial Group in
2001.) Mexico benefited from a strong banking sector during the
2008-2009 crisis and has built on that. So, with Mexico¹s
GDP growing at around 4% annually ‹ at a faster pace
than Brazil ‹ it is ready with a full slate of services
for the uptick in activity.
Citi and Banamex led the league tables in total DCM volume
for Mexican issuers, counting both domestic market and
cross-border transactions, with $5.43 billion. This year, the
bank lead managed a $2 billion 2044 note for the Mexican
sovereign and a ¥80 billion ($1 billion) three and
five-year Samurai that was the first from the region without a
Japan Bank for International Cooperation guarantee.
Citi also brought large offerings to the international
buy-side from corporate issuers including the CFE, Bimbo and
Mexico¹s local debt capital market has remained active
while many of the region¹s other local markets have only
seen sporadic activity. With some $70 billion pesos issued
‹ year to date (through late September), González
says around $130 billion pesos could be issued in 2012 ‹
this is up from around M$100 billion pesos last year.
Banamex, headed up by chief executive Enrique Zorilla,
booked just over $2 billion-equivalent in domestic bond
transactions over the past twelve months. Large transactions on
the local side have included a $7 billion peso
2015 and 2021 bond sale from government development bank
Banobras, deals from corporate heavyweights Mexichem and Grupo
Carso, and a $4 billion peso sale from retailer Liverpool.
³In the local market we¹ve seen spread
tightening,² says González . ³Issuers have
taken advantage of lower rates. Everyone is still bullish on
rates. The macroeconomic conditions of the country are
favorable. It is a dream come true for an economist and
certainly also for an investment banker.² He says the
Afores (pension funds) are still liquid and there should be
little in the way of inflationary pressure. He foresees a
pickup in specialized deals in the local market, with real
estate transactions and auto loan securitizations likely to
appear more frequently in 2013.
More recently, the bank handled more than $2 billion in debt
and equity transactions for Mexichem, following M&A work
that occurred during the awards period. Mexicans buying abroad
América Móvil has been another notable
example is a theme that has many banks eager to generate
business in several product areas.
³I expect a process of internationalization of Mexican
companies,² says González. ³In the next three
years we will see Mexican companies taking advantage of
different valuations, mainly in Europe. If these companies
explore international expansion they will have access to
capital² South America is also a destination for
acquisitive Mexican comapnies, says González.
Citi-Banamex advised on more than $5.7 billion in M&A deals
involving Mexican corporations in the twelve months to the end
of August, the second-highest total.
Banamex¹s $374 million Mexican ECM volume made it a
leader for the period though historically this figure is not
Later in 2012, however, the fortunes for new issuance looked
set to pick up, spurred by deals including Santander
Mexico¹s $4 billion IPO. Bankers expect more opportunities
for small and mid-size Mexican issuers.
³We have a number of new issuers,² González
says. ³There is visible supply getting prepared.²