(Corrects to remove reference to Urbi bond’s relative performance in sixth paragraph.)
Bonds and shares of Desarrolladora Homex SAB (HOMEX*), Mexico’s biggest homebuilder, slumped after a surprise fourth-quarter loss deepened concerns that the industry won’t be able to generate enough cash to pay off debt.
Yields on Homex dollar bonds maturing in 2020 soared 75 basis points, or 0.75 percentage point, to a record high of 10.98 percent at 12:19 p.m. New York time. Shares fell 8 percent, the most in 12 weeks, to 25 pesos.
Homex reported a fourth-quarter net loss of 206 million pesos ($16 million), according to a filing with the Mexican stock exchange, surprising analysts who estimated the company would report a profit of 846 million pesos, according to the median of five forecasts compiled by Bloomberg.
“Expectations were wrong,” Claudio Robertson, the head of fixed-income trading at Investment Placement Group in San Diego, said in telephone interview. “The market thought Homex was different. They tried to make a differentiation between Homex and the rest but reality was unforgiving.”
Mexico’s Habita index of homebuilder shares has plunged 18 percent since Mexican President Enrique Pena Nieto said Feb. 11 that he’ll use the government’s subsidized-housing program to promote apartment construction, which requires bigger initial cash outlays than single-family home construction.
Bonds due 2022 from Urbi Desarrollos Urbanos SAB (URBI*), Mexico’s third-largest homebuilder, have lost 9 percent in the past month, according to data compiled by Bloomberg.
Shares of Corp. Geo SAB, the second-biggest homebuilder, have fallen 28 percent in the past month. Urbi has plunged 37 percent, the worst performance on Mexico’s benchmark IPC index.
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