AMX Lassos Cheap Huaso Funding

America Movil has priced UF4m ($145m) in 5-year bonds on Chile’s domestic market at 98.61 with a 3.00% coupon to yield 3.31%, or 141bp over the government, after drawing demand of around UF6.4m. “It went fantastically well,” America Movil CFO Carlos García Moreno tells LatinFinance. He adds that the price equates to roughly 4.5% in dollars, and was reduced from an initial 3.5% yield target. The America Movil dollar-denominated 5.5% of March 2014 was yielding roughly 6.0% recently. The Mexican mobile telecom, whose Claro brand operates in Chile, had aimed to sell up to UF4m in 3.0% 2014 bonds, up to CLP83bn in peso-denominated 5.5% 2014 bonds or a combination of the two, capped at UF4m. It scrapped the CLP piece. “The market is now more biased towards UF,” says Garcia, adding that pension funds, banks and investment funds were among the buyers. “It was very widely spread amongst a lot of different types of investors,” says treasurer Ricardo Rivera. He declines to estimate the new issue concession, based on a lack of comparables. “It’s a new asset class for the Chilean market and it’s a new type of issuer. I don’t think they have anything to compare it to,” he adds. The Mexican wireless provider claims it is the first “huaso” bond, or issue in Chilean currency directly by a foreign entity. The transaction via Dutch auction was rated AA+ locally. “Now that we are there, it will be our intention to keep Chile as one of our funding options,” says Garcia. “We will work towards developing what we have in Mexico, where we have a well established market, a well defined yield curve, and we’ve been coming to market with some regularity, certainly once, sometimes twice a year,” he adds. Rivera says the company may issue again this year at a different maturity, depending on market conditions. He stresses the diversification benefits of the Chilean market. “We are not planning on swapping anything, but in dollar cost terms it’s substantially cheaper than what we could get in inte