Banca Mifel Gets Tier 2

Banca Mifel emerged Thursday to price a $150m Tier-2 subordinated 10-year bond, after seeing $215m in demand. The Mexican commercial bank priced at 98.442, with a 9.75% coupon, to yield 10%, pricing in line with 10%-area guidance. With the funds, Mifel plans to repurchase its outstanding $100m 11% perpetual bonds, callable in July. Demand was heard coming from existing perpetual bond holders, along with a mix of private banking and institutional accounts. Though difficult to comp, investors were heard getting a 300bp pickup to A2/BBB+ BBVA Bancomer’s Tier-2 subordinated 6.5% 2021 bonds, according to investors and bankers following the deal. Some investors opted out of participation due to Mifel’s small size. A West Coast-based participating EM investor and existing bond holder, says the price represents fair value. “Double digits are tempting, but the deal was small, illiquid and subordinated,” says a European-based EM debt investor. “Many investors don’t play in bank deals, and most of those who do focus on the larger borrowers and more liquid deals,” adds another EM investor. The proposed notes will likely receive a 50% equity credit during the first 5 years outstanding, says Fitch, which assigns a B rating to the new bonds, below the default BB minus mark. Credit Suisse managed. The perpetual bonds were originally sold, raising $150m, in 2007, via Deutsche Bank with Credit Suisse as co-manager.