Iguatemi has 17 high-end shopping centers around Brazil.

MEXICO CITY Mexico’s leading retailer Coppel and Brazilian mall giant Iguatemi are seeking to refinance and borrow roughly $2 billion to boost their working capital amid heightened economic and political turmoil.

Coppel has agreed to terms with 12 banks for a 36-billion peso, or $1.9 billion, loan to replace a previous 8 billion-peso credit facility, pay dividends and raise expansion currency, confirmed a source at Santander, one of the deal’s 12 underwriting banks.

The source on the Spanish bank’s debt capital markets team declined further comment, while a Coppel spokeswoman did not return messages.

Analysts, however, said Coppel is seeking to improve its cash position should Mexico’s economy and political environment worsen with new President Andres Manuel Lopez Obrador’s controversial populist policies and delayed efforts to revamp the North American Free Trade Agreement.

Observers said the retailer, which has built a 1,300-store enterprise by selling aspirational fashion to low-income consumers by being aggressive about offering credit terms, may have sought the loan in lieu of an initial public offering later this year or in 2019.

“This may have been a strategy to raise funds before and if market conditions worsen,” said Alejandra Marcos, retail analyst at Intercam brokerage in Mexico City. “I don’t think there will be much appetite to place a share offering in the market right now. Even though we’ve had a moderate rally after the elections, it’s going to be [meaning whether a Coppel IPO is a success] about the valuation and not so much about investor appetite in the emerging markets or in Mexican risk.”

Marcos said Coppel, which is expected to deliver income of over $1.1 billion this year, is unlikely to float until 2019 given the transition in government and time for a potential NAFTA trilateral accord with Canada to succeed.

The IPO market may also revive then after several years of uneventful offerings as investors have stayed on the sidelines while NAFTA is renegotiated, Marcos said.

Whatever the market conditions, Coppel’s operating landscape has toughened after losing a $1.7 billion bidding war for mass-market clothing chain Suburbia in 2016 and fending off a growing tide of fashion brands arriving in Mexico.

And while the country’s retail sales could climb 5 percent this year and Mexico and the U.S.’ fledgling bilateral agreement to rework NAFTA is seen lifting the $7 billion online market (the duty-free import threshold for specialty goods was doubled), Obrador’s left-wing policies could still unleash turmoil and failure to include Canada in a new NAFTA treaty may bring fresh headaches.

Meanwhile in Brazil, Iguatemi Empresa de Shopping Centers is also tapping the capital markets to strengthen liquidity in case the nation’s already thorny and violent general elections take a turn for the worse, hurting retailers that were betting on a peaceful transition.

Iguatemi, which owns a leading portfolio of luxury malls in Brazil’s top cities, launched a roadshow to raise 500 million reals, or $120 million, in a bond sale to repay other debt and increase its cash position, currently hovering at 630 million reals, or $152 million, according to analysts.

“There is a general rush for corporations with heavy debt to refinance debt now in case the environment worsens and for Iguatemi, this offering is insurance in case conditions deteriorate,” said Fitch Ratings analyst Natalia Brandao, adding that the offering will close in the coming weeks.

She added Iguatemi, which posted second-quarter revenues of 3.3 billion reals, or $794 million, is outperforming the mall segment and struggling retail sector through strong management strategies to offset rental losses. The political and economic environment is very uncertain in Brazil but the shopping malls are doing well and Iguatemi has a very strong position. The company has also been able to minimize mall rent losses by cutting beleaguered retailers’ rent prices and increasing them on restaurants, which have shown more resilience, Brandao concluded.

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