Homex Surges Most on Record as Bankruptcy Rule Spurs Optimism

Desarrolladora Homex SAB (HOMEX*), Mexico’s biggest homebuilder by sales until it defaulted on debt last year, headed for a record rally amid speculation it will benefit from a revised bankruptcy law.

Homex jumped 43 percent to 3.48 pesos at 2:27 p.m. in Mexico City trading. Competitors Corp. Geo SAB and Urbi Desarrollos Urbanos SAB, which like Homex are working to restructure their debt, haven’t traded in Mexico since July after their failure to deliver financial reports in a timely manner led to their suspension from the bourse.

Investors are betting that the new rules will make it easier for Homex to recover after a change in government housing policy resulted in a cash hemorrhage and halted most of its operations, according to Aldo Miranda, a trader at Intercam Casa de Bolsa SA. New bankruptcy rules signed into law this month let companies apply for protection from creditors before their finances become dire, according to a summary of the bill published by the Finance Ministry on its website.

Homex “has many tools to not be delisted and to eventually increase profitability,” Aldo Miranda, a trader at Intercam Casa de Bolsa SA, said in an e-mailed response to questions.

A year ago, Homex shares traded at 29.20 pesos, about eight times the price today.

Homex said in a statement distributed by the stock exchange today that it wasn’t aware of a fundamental reason that could have prompted the spike in its shares.

To contact the reporter on this story: Jonathan Levin in Mexico City at jlevin20@bloomberg.net

To contact the editor responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net

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