Santander Mexico Prices Bond Debut

In its international DCM debut, Santander Mexico has raised $1bn in 2022 senior unsecured bonds while getting $4.3bn in demand. The addition of debt follows a well-received $4.1bn IPO in September. The BBB/BBB+ rated transaction priced at 98.183 with a 4.125% coupon to yield 4.351%, or UST+260bp, the tight end of UST+265bp-area guidance which followed high 200bp talk. The bonds were trading up 0.125-0.375 points in the grey Tuesday afternoon. Some investors reported looking at BBVA Bancomer’s (A1/A minus) $1bn 2022 Tier 2 bonds, seen as a somewhat useful comp despite differences in subordination. “Santander is coming at about 60bp behind BBVA. This is senior debt and one has to give Santander the benefit of the doubt, given its balance sheet and status as a first time issuer. This is a Mexico story and as the economy grows at a moderate pace we may see more from Santander Mexico as it seeks to tap large sources of funding,” says a US East Coast-based EM investor. A Swiss-based investor found Santander’s spread attractive compared to AA3/A/A+ rated Santander Chile quoted at a spread of UST+190bp. More than 250 accounts were heard participating. Santander intends to use proceeds to extend duration of liabilities and to refinance debt maturing in the first half of 2013. Deutsche Bank, Goldman Sachs and Santander managed the transaction.