Telmex Shoots For Tight Refi

Mexico’s Telmex is talking to the loan market about raising up to $800m in 3-year funds, say syndications officials. The telecom’s $1.3bn August maturity is expected to be mostly refinanced, while the balance is covered by the company’s ample cash position. Telmex is conducting talks with banks on its own, entertaining a variety of proposals. Bankers say the company will shoot for the lowest price possible. At launch in 2006, the deal paid Libor plus 20bp, as part of a $3bn package including a $1bn 5-year at 25bp and $700m 7-year at 32.5bp via leads ABN, BBVA, Calyon, Citi and HSBC. With its biggest and most liquid relationship lenders, the telecom might achieve a spread as low as Libor plus 175bp for 3 years, guesses one syndicator. However, that would likely limit size, leaving out those requiring higher spreads. Other MLAs likely pitching Telmex are Santander, BNP Paribas, Barclays and SocGen. Most will expect ancillary business, including local market and cross border bond takeouts, especially if pricing ends up at 200bp or less. Lenders are keen to do business with Telmex, so the question is not whether the loan will get done, but at what price. High grade Chilean ENAP recently clinched $300m in a coordinated series of bilaterals with BNP, Santander and HSBC. The all in price was for the facility was heard in the 200bp area. Bankers appear resigned to the fact that payback on loans to blue chip clients will be severely compressed. This, despite generally restrictive credit conditions for most borrowers in the region, especially high yield.