Mexico real estate: Long way home

Sep 25, 2013

As Mexico’s homebuilders wrangle over restructuring agreements with bondholders, the blame game is fierce

By Mariana Santibáñez

In July, Mexico’s largest homebuilder Desarrolladora Homex skipped a payment on its 9.5% 2019 bond.

Homex had worked to avert default in the previous months. In April, it sold its stake in two prisons to Carlos Slim’s IDEAL and Grupo Financiero Inbursa for four billion pesos. It also took out a bridge loan under a new government loan guarantee program.

But that wasn’t enough.

After missing the interest payment, the company faced a series of ratings downgrades, as well as a lawsuit by Barclays and Credit Suisse for $70 million for terminating derivative contracts.

The builder hired JPMorgan to advise it on its strategic options.

Shortly thereafter, two more homebuilders, Corporación Geo and Desarrollos Urbanos (Urbi), joined Homex in a string of defaults as they struggled with heavy debt loads and a changing industry.

The sensitivity of the issue — the three are still...

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