Unifin to stop payments on its debt

Quick read
Americas, Emerging Markets
Jo Bruni

Mexican non-bank financial institution Unifin announced on Monday it would stop making interest and principal payments on its debt, effective immediately.

Attributing its decision to the "global economic environment" affecting Mexico's non-bank financial sector, the company said it plans to move forward with a "strategic restructuring."

Unifin's dollar-denominated bond debt totals US$2.4bn, according to Refinitiv data.

The Mexico City-based company said it intended to negotiate standstill agreements for the short-term with its creditors. Rothschild, AlixPartners, Sainz Abogados and Skadden Arps are advising Unifin on the restructuring.

On Unifin's second-quarter earnings conference call, bondholders raised concerns about the company's ability to meet its obligations for bonds maturing in 2023 and 2024.

In response, CEO Sergio Camacho outlined plans for the company to issue a Ps4bn (US$196m) local long-term bond in the third quarter which he said would be partially guaranteed by Mexican national development bank Nacional Financiera. In addition, he said Unifin could also look to raise US$175m through a private dollar-denominated placement by the end of the year.

The B+/BB– rated institution, which operates in the leasing segment for small and medium-sized Mexican enterprises, has US$318m of a 7.25% unsecured senior bond coming due September 2023. In 2024, it is on the hook to pay US$200m for a 7% note due August 2022 that bondholders recently agreed to extend to avoid a default.

On Tuesday, the company's 2023s were quoted at 53.25, down from 91.625 at the start of the year.

Two other Mexican non-bank financial institutions – Credito Real and AlphaCredit – recently filed for bankruptcy.