Desarrolladora Homex SAB (HOMEX*) shares and bonds plunged to a record after the homebuilder said it will try to raise money by selling assets and issuing debt after cash last year fell by the most in at least a decade.
Mexico’s biggest homebuilder by sales sank 18 percent to 12.86 pesos at 2:34 p.m. in Mexico City. The company’s bonds due in 2020 dropped 2.59 cents to a record low 57.25 cents on the dollar.
“This serves to corroborate that the situation is very complicated,” Carlos Hermosillo, an equity analyst with Grupo Financiero Banorte SAB, said in a phone interview. “The companies keep burning cash at a fast pace.”
Homex follows Urbi Desarrollos Urbanos SAB (URBI*) and Corp. Geo SAB (GEOB) in taking measures to bolster liquidity as Mexico’s government shifts subsidies to promote capital-intensive apartment buildings in urban areas over single-family houses in the suburbs or countryside. The Culiacan, Mexico-based company’s cash fell by 1.7 billion pesos ($131 million) last year, the most since Bloomberg started compiling the data in 2001.
The company may offer debt backed by future cash flows and private-equity stake sales in its infrastructure and jail projects, according to a filing today with the Mexican stock exchange. Homex also is considering selling assets in its tourism division.
The shares have tumbled 48 percent in the past month, leading a 32 percent decline in the Habita Index of Mexican homebuilder shares.
Geo, Homex and Urbi were the three biggest losers today on the country’s benchmark IPC index, which fell 2 percent.
Geo, Mexico’s second-biggest homebuilder, said last week it would restructure its debt. Urbi, the third-biggest, hired Rothschild as a financial adviser, a person familiar with the move said April 11.
President Enrique Pena Nieto said that Mexico has a “firm commitment” to the sector at a housing event in Mexico City on April 11.
The government said March 6 it would cover as much as 30 percent of banks’ losses on loans made to the country’s homebuilders. Homex said last week it was the first company to obtain a bridge loan under the program.
“The government supports the housing sector,” Hermosillo said. “That doesn’t mean necessarily support for these home developers. It’s a very broad industry.”
Geo shares fell 14 percent to 5.45 pesos. Urbi dropped 10 percent to 2.42 pesos.
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