Posadas Raises $225m for LM

Grupo Posadas has priced a $225m 5NC3 bond, upsizing from $210m and raising funds for a cash tender targeting its $200m outstanding 9.250% 2015 bonds. The B2/B/B+ Mexican hotel operator priced the senior unsecured 2017 at 99.493 with a 7.875% coupon to yield 8.000%. This came at the tight end of 8.000%-8.125% revised guidance, in from 8.250%-area price talk. The bonds were trading up 0.375-1.000 points in the grey, according to investors. Though a difficult bond to comp, some investors looked at the issuer’s illiquid 2015 bonds, while others looked at single B Mexican names with similar debt levels. “The book grew throughout the day and the issuer was able to tighten significantly. It was an exercise in price discovery and pricing at 8.0% testifies to that,” says a person familiar with the sale. In the end, Posadas was able to generate nearly $1bn in orders from a mix of fund managers and retail investors, according to a banker familiar with the transaction. Proceeds will be used to fund the cash tender. Holders of $116.6m, or 58.3%, had accepted the offer as of the November 23 early deadline. Posadas offered holders $1,060 per $1,000 principal before the early deadline, and is offering $1,045 per $1,000 through the November 30 final deadline. Bank of America Merrill Lynch, Citi, Deutsche Bank, JPMorgan and Santander are managing the process.