Mexico’s Banorte Plans MXP3bn Sub-Debt

Mexico’s Banorte plans to sell about MXP3bn of tier-2 subordinated debt, followed by a state and municipal debt securitization to the tune of MXP5.5bn later in the year, investor relations officer David Suarez tells LatinFinance. A roadshow for the sub-debt is planned for June, with Banorte’s own DCM desk handling the sale. Suarez says the issue will likely be a 10-year non-call 5 and is hoping for pricing of 50bp-100bp over TIIE. Banorte, Mexico’s fifth largest bank and the only large locally owned financial institution, sold MXP3.6bn in 10 and 20-year bonds in a similar deal in March, pricing a 2018 tranche at 60bp over 28-day TIIE. Suarez says the upcoming deal will likely price wide of that. “Conditions were much better in March, because there were expectations that rates in Mexico were going to come down,” he says. “The yield curve has shifted upwards and the long part of the curve is more expensive now,” he says. “It’s probably going to be a higher interest cost, but it’s still going to be below the average for Banorte’s cost of capital.” Suarez says the debt sale will be tier two because the bank’s tier one window is almost full. There is no date set yet for the state and municipality debt securitization.