Mexico fills deal-making void left by Brazil in tough year
By Guillermo Parra-Bernal
SAO PAULO, April 1 (Reuters) - With regional heavyweight Brazil less of a force in global capital markets this year, Mexican companies are filling the void by luring more investment in the form of mergers and acquisitions, bond and equity offerings.
Several deals have taken place since Mexico's $2 billion sovereign bond sale in January as investors look to benefit from the impact of U.S. economic growth on its southern neighbor.
First-quarter deal-making activity was more robust in Mexico than anywhere else in Latin America for only the second time in a decade. Thomson Reuters data shows the value of announced mergers and acquisitions in Mexico reached $8.64 billion, above Brazil's $8.51 billion.
Illustrating how the tables have turned, $13.93 billion worth of M&A deals were announced in Brazil during the first three months of 2014, against just $3.99 billion for Mexico.
Bankers expect the trend to extend to the underwriting of stock sales, such as initial public offerings. Brazil is experiencing a turbulent year as an economic slump and a corruption probe at state-controlled Petróleo Brasileiro SA sap business confidence, investment and capital markets activity.
"Mexico continues to be the region's darling," Ignacio Benito, JPMorgan Chase & Co's managing director for Latin America M&A and equity capital markets, said in New York last week. "You may have whatever issue hampering sentiment but with the U.S. economy doing well, it's hard to see Mexico not getting a lift from it."
Although Mexico's economy has consistently underperformed over the last decade, it is expected to grow more than 3 percent this year and long-awaited reforms in the telecommunications and energy industries spurred recent takeovers such as AT&T Inc's purchase of Grupo Iusacell SAB last year.
The disposal of telephone, cement and industrial assets by market leaders are spurring optimism that bidders could seek merger financing, bankers said. Continuación...