Bottler Clinches Short Dated Paper

Embotelladoras Arca has priced MXP1.4bn in13-month (392 day) bonds in the local market at the 28-day TIIE plus 155bp. Proceeds are being used to pay down maturing bank debt. Executives managing the sale claim no official guidance had been given, but pricing appears to have come wide of expectations. Bankers had largely expected the issue to come somewhere between the TIIE plus 80bp that fellow bottler Coca-Cola Femsa got on MXP2bn in 13-month bonds in January, and the 150bp that retailer Liverpool paid for MXP700m in12-month paper earlier this month. That it came 5bp wide of Liverpool was a surprise, says a banker away from the deal who acknowledges it is very difficult to predict pricing right now. It is worth noting, however, that up to 50% of the KOF transaction was designated for the underwriters’ retail clients, whereas Arca was sold mostly to institutions. Arca plans to use proceeds to help repay MXP2.3bn in bank loans raised with Inbursa and BBVA that carry 11.5% interest due in April and November 2009, which are also managing the new issue. Demand reached just over MXP2bn, according to bankers managing the AAA sale, primarily from institutional investors.