Category: Regions

Mexico’s Bimbo plans to sell up to MXP5n ($363.4m) in bonds in the domestic market early next month. The 7-year fixed-rate bonds will represent the fourth issuance under a MXP20bn program with proceeds to be used to help refinance a $1.3bn syndicated loan. Inbursa, ING, and HSBC are managing the deal, rated AA plus on a national scale. The size of the domestic transaction may be adjusted depending on results of Bimbo’s cross-border bond, says a banker on the deal. Meanwhile, the Mexican baked goods company will hit the road next week splitting into two teams to go to San Francisco, the Mid West, New York and other East Coast cities next week. BBVA, Citi and Santander, have been mandated to organize meetings with talk that a 144A/RegS transaction may follow should market conditions permit for its international bond plans.

Mexican bake good company Bimbo will hit the road next week, going deep into investment-grade territory as it looks to tell its story to investors off the usual roadshow circuit. Now the largest bakery company in the world, the investment grade credit is coming off a recent acquisition spree that it hopes will stand it in good stead among investors going forward. With just one international bond outstanding, the company still trades wide to its US peers as well as other high-grade Mexican names. For instance, its outstanding 4.875% 2020s are trading at around 4% or 208bp over US Treasuries, versus about 3.40% for America Movil’s 2020 and 130bp for some of US comps like Kraft and Heinz, says one banker. Most recently the company agreed to buy Sara Lee’s fresh bakery business in Spain and Portugal, financing the transaction through cash on hand and existing credit lines. Bimbo, rated Baa2/BBB/BBB, has mandated BBVA, Citi and Santander, to organize meetings with talk that a 144A/RegS transaction may follow should market conditions permit. The borrower is splitting into two teams and will be in San Francisco, Chicago and Milwaukee on Tuesday January 10, in Boston, Des Moines and Baltimore on January 11, in Philadelphia on January 12, in New York between January 12-13, and in London on January 16. Bimbo made its debut in the summer of 2010, when it issued a $800m 2020 at 99.726 with a 4.875% coupon to yield 4.910%, or UST plus 180bp, the tight end of 185bp area guidance. Bank of America Merrill Lynch, Barclays and HSBC managed the sale on that occasion.

Pemex plans to meet fixed-income investors in the US and Europe beginning January 9. The state-owned oil producer is scheduled to kick start the 5-day investor meetings in Boston and Chicago on Monday, January 9, followed by visits to accounts in Los Angeles on Tuesday. It will then go to New York on Friday, January 20, before wrapping up in London between January 23-24. The unusual roadshow schedule is thought to reflect management’s availability. BAML and HSBC are arranging the tour. In December, Pemex became the first corporate to issue global depository notes (GDNs), allowing international investors to participate in the local Mexican debt markets. HSBC, Santander led as bookrunners while Morgan Stanley served as structuring agent. Pemex (Baa1/BBB) last visited the international bond market in October 2011, when it made an opportunistic retap of its 6.5% 2041 that allowed it to raise $1.25bn with BNP Paribas and Deutsche Bank. On this occasion, BAML and HSBC are taking the credit on the road.

Mexico’s Comision Federal de Electricidad (CFE) is heard looking to pay TIIE+ 35bp for an up to MXP2.77bn ($202.7m) 3-year floater, with pricing expected on January 24. This 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 early December, raising MXP1.358bn in 4-year bonds, pricing them at TIIE+35bp. Scotia is managing this transaction, rated AAA on a national scale.

By pricing a new $2bn 10-year benchmark, the United Mexican States (UMS) refreshed this point of the curve, coming with its lowest coupon ever despite competing supply from Brazil Tuesday. The $5bn plus book underscored the abundance of cash on the sidelines, especially for strong investment-grade sovereigns, even on a day when market favorite Brazil beat the UMS to the punch by announcing a retap earlier that morning. Strong US economic data certainly provided a boost to Mexico’s efforts, but accounts were also keen to get their hands on a new 10-year given that the 2020 benchmark was starting to look long in the tooth. Indeed UMS hadn’t been in the market with a bond of this tenor since February last year when it retapped the 5.25% 2020s for another $1bn. Mexico felt it had a large enough audience to move forward Tuesday morning, ideally targeting a $1.5bn trade. Size was seen as priority as Mexico wanted to create a large liquid benchmark out of the box. Anticipating more sovereign supply from other corners of the EM universe, it was also thought wise to move forward sooner rather than later. Emerging with whispers of 180bp over UST, the borrower eventually launched a larger-than-expected $2bn deal at a tighter 175bp, and eventually priced at 99.322 with a 3.625% coupon to yield 3.706%. The spread was wider than the 150bp achieved on Brazil’s $750m retap of its 4.875% globals due January 22 2021. The maturity differential with Mexico’s March 2022, the extra cost of a new benchmark bond and the larger $2bn size – one of the sovereign’s single biggest trades ever – was seen justifying the extra spread. Besides, Brazil now typically trades inside the UMS, which has been weighed down by its connection to the US economy and arguably doesn’t hold the same rising-star status as its South American peer, at least in some investors’ minds. With the 2020s trading at around 155bp over the interpolated curve, the new UMS bond came with a 20bp new issue premium, or arguably ju