Category: Regions

With optimism over global growth prospects bolstering stock markets Tuesday, Pemex decided to step forward with a new 10-year benchmark that ultimately squeezed its new issue premium to anywhere between 10-14bp. Testing the waters with plus 325bp area guidance, Mexico’s state-owned oil company was able to build a $5.5bn book before launching at 315bp and pricing a $2bn 2022 at 99.119 with a 4.875% coupon to yield 4.988%. “We thought it was fair value and bought it,” says a London-based EM debt portfolio manager. The bond was thought to give investors a new issue premium of anywhere between 10bp-14bp against a curve adjusted spread on the existing 2021s. “Considering the amount of supply from Mexico and final pricing at 10bp adjusting for curve, it was a good new issue premium,” notes a rival banker. In all, about 20% of investor participation came from Europe, 14% from Mexico and the rest from the US with institutional accounts playing a leading role. The borrower essentially interrupted investor meeting to launch the trade, but will continue engaging accounts into next week. The bonds were trading flat in the grey, according to an investor. The issuer has an option to exercise a greenshoe during Asia hours. Bank of America Merrill Lynch, Citi and HSBC led the 144A/RegS transaction.

Two Mexican high-grade credits – Bimbo and Pemex – are the sole bond issuers left making the rounds this week after the region saw some $8.1bn in cross-border bond supply year to January 15. That tops the $6.16bn seen during the same period last year, and volumes could certainly rise further amid speculation that sovereigns like Peru and Panama, not to mention corporates, may try their luck in coming weeks. A series of sovereign downgrades across Europe by S&P last week threatened to sour the tone for new issuance, but so far investors seemed to have largely shrugged off such moves. Mexican bakery goods company Grupo Bimbo is likely to come first amid expectations that it will pull the trigger on an up to $800m 10-year, but only if pricing is attractive. It essentially wrapped up roadshows Monday, though investors say the company will also be in New York today for a luncheon. Neither whispers nor price talk has emerged, though accounts and rival bankers were heard discussing last week anything from high 200s to as tight 275bp. That compares to the 230bp secondary level seen on its 4.875% 2020s, according to one investor. “They’re a very price sensitive issuer and don’t like to pay up, but there is no deal unless pricing is right,” says a senior portfolio manager who met with the name and sees plus 275bp as attractive. Moody’s has assigned a Baa2 to the proposed issue. According to investors, Bimbo is expected use proceeds to finance $1.3bn in bank debt coming due in 2014-2016. BBVA, Citi and Santander are managing the 144A/RegS transaction. Separately, Bimbo is also readying an up to MXP5n ($363.4m) bond in the domestic market for early next month. The 7-year fixed-rate issue will mark the fourth offering under a MXP20bn program, with proceeds also expected to refinance bank debt used for the purchase of Sara Lee assets. Inbursa, ING, and HSBC are managing the deal, rated AA plus on a national scale. Bimbo made its cross-border debut in the summer of 2010, when it i

Mexico’s Comision Federal de Electricidad (CFE) sees a late February to early March pricing on a 2022 domestic bond issue of up to MXP6bn ($442.9m) in size. The Mexican state-owned issuer had originally set a preliminary pricing date of January 10. Proceeds are expected to cover infrastructure project expenses. Ixe and Scotia Capital are managing the offering, rated AAA on a national scale. Separately, CFE is on track to price an up to MXP2.77bn 3-year floater on January 24, with Scotia as sole lead. The transaction, also rated AAA, will be done through a recently-renewed Bancomext-guaranteed trust to pre-fund subcontractors’ authorized expenses under a special infrastructure program. CFE issued under this program in December, raising MXP1.36bn in 4-year bonds at TIIE+35bp through Ixe.