Upsized Progreso Bond Trades Up

Guatemala’s Cementos Progreso generated $2.2bn in orders for its $350m international bond debut, upsizing by $50m and tightening down yield while still seeing an aftermarket pop. The 2023 NC5 senior unsecured bond priced at 98.253 with a 7.125% coupon to yield 7.375%, at the tight end of 7.375%-7.50% guidance and earlier mid-to-high 7% talk. The bonds were trading up 2 points late Tuesday, according to investors. “Progreso was tight for what it was, but apparently I’m in a distinct minority,” says a New York-based portfolio manager following the sale and noting robust demand. A new bond from Mexican comp Grupo Cementos Chihuahua (GCC) might price near 8.0%, notes a banker away from the deal, spotting a 7.11% yield Tuesday on GCC’s 2020 bond and adding 80bp for curve extension and new issue premium. “But Progresso should price inside Chihuahua (B/BB-) given a higher rating, lower leverage, higher margins, and a better market position,” the banker says. Progreso plans to use proceeds for debt refinancing, capital expenditures and general corporate purposes. Cementos Progreso is the market leader in Guatemala’s cement industry, with a market share of 84% during the first half of 2013 in terms of volume sold, and is the only clinker producer in the country. Progreso was founded 1899 by Carlos Federico Novella Klee, who built one of the first cement plants in Latin America.