Bloomberg News

Gruma Rises to Four-Year High as S&P Upgrades: Mexico City Mover

March 15, 2012

Gruma SAB (GRUMAB), Mexico’s largest maker of corn flour for tortillas, rose to a four-year high after Standard & Poor’s upgraded its debt and Banco Santander SA (SAN) increased its price target.

The shares gained 2.7 percent to 32.70 pesos at 2 p.m. Mexico City time, the highest closing price since Jan. 16, 2008. The benchmark IPC index of 35 Mexican companies rose 0.4 percent to 38,134.57. Yields on Gruma’s $300 million in perpetual notes were little changed at 7.77 percent.

S&P raised Gruma’s debt rating one notch to BB yesterday, citing lower leverage and its use of derivates to hedge against corn price swings. The outlook is “stable.” Separately, Banco Santander SA reiterated its “buy” rating on the stock and raised its year-end price target to 40 pesos, implying a 26 percent gain from yesterday’s close.

“Gruma remains an attractive investment,” Santander analysts led by Luis Miranda and Berenice Munoz wrote in a research note today. There’s “a healthy outlook for Gruma Corp. and Mexico corn operations.”

Gruma Corp. is the company’s U.S. unit.

Gruma shares have gained 24 percent this year through yesterday, making it the fifth-best performer on the IPC index. Empresas Ica SAB (ICA*), the country’s biggest construction company, led the group with a 44 percent advance.

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

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net


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