In Mexico's largest lending transaction since the country's financial crisis broke in December 1994, Chase Manhattan Corp. and J.P. Morgan & Co. have taken the lead on a $1 billion one-year loan for Telefonos de Mexico SA.
Bankers said strong demand brought 30 other banks into the deal, mostly European and Japanese.
Three other U.S. banks-BankAmerica Corp., Bankers Trust New York Corp. and Citicorp - participated in the loan, which carried an unusually low spread of 60 basis points, or 0.6%, over the London interbank offered rate, or Libor.
Bankers said the low spread underscores growing confidence that Mexico's economy is beginning to pull out of a two-year slump and demonstrates the stiff competition among banks for loans to Latin American borrowers.
"This is the largest deal we've seen coming out of Mexico since the peso crisis," said one banker close to the deal.
She added that several smaller loans to Mexican and other Latin American borrowers are currently being arranged.
Mexican borrowers have by and large relied on issuing bonds on the Euromarket for their medium- and longer-term financing needs.
Bankers participating in the deal, however, noted that it is virtually impossible to issue short-term paper of one year or less on the Euromarket. They added that, as a result, Telmex and other companies borrowing short term now prefer to turn to banks.
In a similar but smaller deal, Citicorp, J.P. Morgan, Chase, and Bankers Trust have organized a $600 million, one-year revolving credit for Cementos de Mexico SA, also known as Cemex.
According to Loan Pricing Corp., New York, bank lending to Latin America surged to $7.2 billion in the first quarter, up 55% from last year's first quarter.
Citicorp was the top bank lender to Latin borrowers with $2.34 billion in loans, followed by France's Societe Generale and Germany's Dresdner Bank.
U.S. banks participated heavily in the largest loan during the quarter, a $600 million syndication for Southern Peru Copper in which Chase Manhattan, Citicorp and J.P. Morgan participated.
And lending continues to climb during the second quarter. NationsBank Corp. last month arranged a $1.2 billion bridge loan to Brazil's Companhia Siderurgica Nacional to acquire the Brazilian mining conglomerate Companhia Vale do Rio Doce.
