America Movil Plans Chile Bond Issue

Regional mobile telephone powerhouse America Movil is planning its first ever Chilean peso denominated bond issuance. A 5-year deal through Banco de Chile is expected as soon as this month, America Movil CFO Carlos Garcia Moreno tells LatinFinance. “It’s going to be the first issue in this format for a foreign issuer directly in the Chilean market,” says the official. “In local currency, rates are lower in Chile than in Mexico,” he adds, saying launch will likely happen this month. America Movil, one of the most advanced LatAm corporate issuers, has a Chilean unit it will finance with proceeds. The company wants to have a more active presence in the CLP market. “Chile is a very sophisticated market, it’s very developed. America Movil is a company that has always liked local markets,” says Garcia. The deal comes from a 30-year $1.2bn program, provisionally rated A3 (stable) by Moody’s. The agency notes America Movil’s leading position in Mexico – with approximately 73% of the wireless market – as well as LatAm, where it has close to 183m subscribers, operating cash flow of $10bn in 2008 and low leverage of 1.1x debt/Ebitda last year. Ratings are constrained by reliance on pre-paid subscribers – over 88% of total subscribers as of December – which Moody’s says are more vulnerable to changes in consumer disposable income than post-paid subscribers. “In addition, the ratings incorporate the challenges in improving margins in the highly competitive Brazilian market, which is expected to become an increasing proportion of the company’s consolidated results,” it adds.