Alfa’s Petrotemex Tries Bond Luck

Mexican petrochemicals producer Petrotemex is set to begin tomorrow a US and European road show supporting a new $200m 2014 bond. The issue will be Petrotemex’s first in the public cross-border market, though it has $75m outstanding in privately issued 2012 notes. The unit of conglomerate Grupo Alfa is raising the funds to take out existing debt. Investor meetings are scheduled for Wednesday in New York, Thursday in Boston, Friday in Los Angeles and will finish Monday in London. Bank of America-Merrill Lynch and JPMorgan are managing the transaction. The manufacturer of chemical products used in making polyester will look to follow high-yield compatriots Javer, which sold $180m in debut 2014s last week, and Alestra, which is expected to print $200m in 2014s as soon as Friday. Fitch has rated the issue BB+, noting the offering should mitigate refinancing or short-term liquidity risk and allow the company to rebalance its debt maturity profile. Petrotemex had approximately $624m of total debt as of June 30, Fitch says, including $308m in syndicated bank loans. It raised a $150m 5-year dual currency loan in December 2007, led by Santander and Standard Chartered. The facility stipulates that the margin over Libor/TIIE should be 45bp and 55bp, respectively, for a leverage ratio of 2.5x-3.0x. Using the $624m in total debt the on the company’s balance sheet and its trailing 12-month Ebitda through June 30 of $243m, the company’s leverage ratio stands at just over 2.5x.