ML-Implode News - Dollar-Debt Blows up in Mexico, Pushes Biggest Construction Firm toward Abyss

After weeks of false promises, rampant speculation, and furious denials, Mexico's biggest construction company, ICA, finally admitted that it will not pay the $31 million in interest outstanding on $700 million worth of bonds. The company's shares plunged 24% to 3.93 pesos on the news, its biggest one-day rout since 1999.... If ICA fails to make payments on all of its $1.35 billion in overseas notes, it will become the biggest corporate bond defaulter in Mexico since Moody's Investors Service began tracking the data in 1995, just after the eruption of Mexico's Tequila Crisis.
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The company's travails began long ago but were recently magnified by political problems at home and economic forces overseas. Its revenues have sharply declined this year amidst infrastructure spending cutbacks by a fiscally challenged government, while the weaker peso has exacerbated the company's leverage ratios.

ICA is among a number of Mexican corporations that are acutely vulnerable to a strengthening dollar and rising U.S. interest rates. The sudden rise in central bank-engendered liquidity after the outbreak of the Global Financial Crisis enabled Mexico's biggest companies to borrow from the international markets in much larger amounts and for much longer periods than at any other time in history.

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Dollar-Debt Blows up in Mexico, Pushes Biggest Construction Firm toward Abyss