Category: Regions

Mexican baked goods company Grupo Bimbo achieved its pricing goals Wednesday when it sold an $800m 10-year bond that some argue came virtually flat to its underlying curve after building a book that reached $6bn in size. This comes after the company completed an extensive roadshow deep into US investment-grade territory as it looked to reposition its credit standing and sell itself as a global entity. Its Mexican roots may have loomed large among some investors, who asked why they should buy Bimbo when the country’s state-controlled oil company Pemex was offering 315bp on its new 10-year Tuesday. But overall most accounts focused on the attractive spread differential to other US food names, and any future upside. .“Kraft and Heinz are trading in the low 100bp range, and at 270bp over there is quite a bit of juice. It was fair and we bought it,” says one participating senior portfolio manager. In the end , the Baa2/BBB/BBB rated company’s 2022 notes came at 99.190 with a 4.5% coupon to yield 4.602%, or UST+ 270bp, at the tight end of revised guidance of 275bp (+/-5bp) and well inside initial talk of 287.5bp area. “Good company, but too tight for us,” says one EM portfolio manager who opted out of participation. According to leads the deal came flat to secondary levels on the existing 4.875% 2020s which were spotted at 269bp on an interpolated basis Wednesday. “It was a phenomenal trade,” says a DCM banker away from the deal who saw a 7-8bp new issue premium. Arguably such tight new issue premiums are somewhat illusory considering that the underlying bond sold off in anticipation of a new issue while roadshows took place. Similar arguments were made about Pemex’s tight new issue premium Tuesday, when it placed its new 10-year. Nonetheless, a $6bn book was seen as confirmation of Bimbo’s success, not to mention the +0.75-1.00 levels seen in the grey Wednesday afternoon. “It’s a good consumer goods company with great cash flow and strong consumer brands,” says another D