Toll Road ABS Favored for Farac Takeout

For Goldman Sachs and ICA, the possibility of issuing toll road revenue-backed paper in the local Mexican market on a large scale was confirmed by a June notes offering from Carlos Slim’s IDEAL, according to bankers familiar with both transactions. Mexican institutions gobbled up MXP7bn in asset-backed bonds issued across fixed, floating and UDI-denominated tranches, marking the largest MXP offer priced year-to-date. IDEAL scaled back its issuance from MXP11bn due to investors’ distaste for fixed-rate paper, but it did well on an all-in cost basis, say bankers. The issuer secured a MXP1.5bn 2015 floating rate tranche at TIIE plus 28bp, a MXP1.3bn 2036 fixed-rate piece at 10.50%, and a MXP4.3bn-equivalent UDI-denominated 2036 tranche at 5.69%. Plans for a takeout of the $3.5bn 7-year peso-denominated Farac loan are long overdue, according to several banks participating in the syndication. Lack of guidance from ICA and Goldman on timing of a takeout proved to be a source of frustration for some lenders. Santander, HSBC, Dexia and NordLB led the Farac loan.