Category: Regions

Continuing long-term plans to term out bank debt, Mexican-based baker Bimbo has raised $800m from a 10-year bond, the first dollar-denominated LatAm new issue in more than 7 weeks. Investors seem generally happy with price, although some wanted more since it was a public debut. The Baa2/BBB 2020 bond came at 99.726 with a 4.875% coupon to yield 4.910%, or UST plus 180bp, the tight end of 185bp area guidance. It drew more than $3.5bn in orders, according to bankers on the deal, and had tightened to UST plus 173bp late Wednesday, according to a trader. “It is a superb company, which really performed well during the crisis,” Carlos Legaspy, president of Precise Investment Management, which manages $400m in LatAm bonds, tells LatinFinance. Pricing is fair, he says, though it might have been expected a bit wider given that it is a debut. The deal came about 30bp-35bp wide to Baa2/BBB minus Kraft, the closest comparable, investors say. The approximately 200 buyers were mostly US and mostly investment-grade, say bankers on the deal. However, EM was represented more than in A3/A minus Coca-Cola Femsa’s almost exclusively high-grade deal earlier this year. Bankers on the deal claim it is the second-lowest LatAm corporate yield ever, after KOF. Bankers away from the deal generally viewed it positively. They are encouraged that the door maybe open for other LatAm issuers, particularly if volatility in markets continues to subside. Bank of America Merrill Lynch, Barclays and HSBC managed the sale, which followed a US and UK roadshow. Bimbo aims to reduce leverage to 2.0x at year-end from 2.5x March 31 and also tapped Mexico’s local markets last year for MXP10bn. Bimbo has said it would consider another MXP bond this year, though bankers on the deal stress the issuer was always interested in dollars, especially since 45% of revenues now come from the US. The 144A/Reg S bond is listed in Ireland and guaranteed by the Bimbo SA, Barcel, Bimbo Bakeries USA and Bimbo Foods units. Pro

Mexican silver miner Penoles has decided to down tools on a debut bond issue in the domestic market, according to bankers on the trade. Penoles had been set to price today up to MXP7bn in eagerly awaited local bonds. The issuer is heard failing to find an acceptable FX derivative structure to swap the issue back into dollars, its main earning currency. It will consider FX-indexed MXP, or perhaps USD, issuance at a later date, according to investors. The silver miner was to sell its first-ever domestic bonds using a structure giving it the option to split into 10-year fixed-rate notes and 5-year floaters basis TIIE. BBVA Bancomer, HSBC and Santander had been managing the sale, rated AA+ on a national scale. The issuer had been seeking funds for debt refinancing and funding investment. Still on for today, however, is a MXP2bn ABS from the Mexico City government. The securitization of tax revenues from the federal government is seen paying around TIIE plus 40bp on a 2015 and Mbonos plus 100bp for a 2020 fixed-rate tranche.

As the number of Mexican issuers coming back to the domestic bond market grows, state-owned utility CFE has joined the list of entities planning to raise funds, according to regulatory filings. CFE plans to reopen an outstanding 8.85% of 2019 fixed-rate issue as well as sell new floaters due 2020, for up to MXP3bn total. Proceeds will be used to finance projects, according to the documents. The 2019s were sold originally in August 2009 for MXP3.42bn, and reopened in March for MXP2.4bn. Banamex and BBVA Bancomer are managing the sale, rated AAA on a national scale and scheduled for an unspecified date in July. Last month, fellow AAA state-owned credit Pemex priced MXP5bn of a reopened 9.1% of 2020 bond to yield Mbonos plus 113bp.

Mexico’s Banorte is set to meet the buyside next week on a non-deal roadshow, investors say. The bank, absent from dollar markets since 2006, will hit New York, Boston and Los Angeles June 28-30. JPMorgan is managing the process. Investors place Banorte on the growing list of roadshowing issuers that are candidates to raise funds if markets continue to stabilize. The list includes Pemex, Bimbo and Banco Votorantim. Banorte, rated BBB/BBB minus, raised $600m in 2006 through the sale of $400m in 2016 bonds and $200m in 2021s, via Credit Suisse, Morgan Stanley and UBS, according to Dealogic.

Mexico’s Banxico has left the monetary policy rate unchanged at 4.50%, in line with market expectations. Goldman Sachs expects the central bank to keep the policy rate unchanged at 4.50% until the end of 2010. Depending on how firm and broad based the recovery turns out to be, the shop believes Banxico could initiate a preemptive rate normalization cycle late in Q1 2011 through moderate 25bp monthly rate hikes for 100bp total, pushing the policy rate to 5.50% by the end of 2011. Barclays also thinks Banxico will keep the rates on hold for the rest of this year and begin normalizing them in 2011.

Analysts expect Mexican rates to stay put. Morgan Stanley says Banxico is likely to once again keep the monetary policy rate unchanged at 4.50% today and throughout 2010. It adds that after a temporary increase early in the year, inflation has eased and seems on track to undershoot Banxico’s forecast path in coming quarters, based on consensus expectations. Barclays also expects the rate to remain unchanged until the end of the year and to then tighten to 5.25% in Q1 2011.

Fitch has changed the outlook on Mexico-based Petrotemex’s BB+ rating to stable from negative to reflect the company’s increased cash generation and debt reduction in 2009. Petrotemex’s cashflow from operations for fiscal year 2009 was about $220m, up from $68m during 2008. The company’s total debt to Ebitda ratio for the last 12 months ended March 31 was 2.4x, an improvement from 3.3x during 2008, adds Fitch. Chemicals company Petrotemex is a subsidiary of Alfa, one of Mexico’s largest industrial conglomerates.