Vitro Bonds Signal Sell to JPMorgan: Mexico Credit

Vitro SAB’s defaulted bonds are rallying to a two-month high, a sign to JPMorgan Chase & Co. and BCP Securities LLC to sell the securities because the price overvalues the Mexican glassmaker’s latest debt-restructuring offer by almost 50 percent.

The company’s dollar bonds due in 2017 are trading at 74 cents on the dollar, the highest level since Sept. 2, according to data compiled by Bloomberg. Jim Harper, director of corporate research at Greenwich, Connecticut-based BCP, said the restructuring proposal Vitro unveiled on Oct. 31 is worth “much closer to 50” cents on the dollar.

A Mexican judge ruled Aug. 12 that $1.9 billion of intercompany debt can be included in the restructuring, making Vitro its own biggest creditor and improving the chances the deal will win approval. Investors will demand higher yields on Mexican corporate debt on concern Vitro’s move will set a precedent followed by other issuers, said Robert Rauch, who manages $2.2 billion of emerging-market assets at Gramercy Advisors LLC.

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