Femsa Eyes Local Issue

Femsa is preparing a bond issue of up to MXP2bn in fixed and floating rate notes, according to S&P, which rates the transaction AAA on a national scale. The offer will feature a fixed rate tranche with a maturity of up to 5 years, and a tranche priced over the TIIE with a maturity of up to 2 years. Timing is not clear. HSBC and Banamex are managing the deal. The issue would be the second and third draws from FEMSA’s 5-year MXN10bn program. The brewer has a strong market position and strategic importance to Coca-Cola. But it faces volatility and country risks in its South and Central American markets, intense competition in the key Mexico operation, and exposure to commodity input cost fluctuations, S&P says.