Geo Joins High Yield Pipeline

Mexico’s Corporacion GEO plans to sell 5-year bonds, and is set to begin investor meetings next week. The homebuilder plans to offer up to $200m, according to a Fitch report, which assigns a BB minus rating. A two team road show will begin Sept 14 in Singapore and London, and visit Hong Kong, New York, Switzerland and Boston before finishing in Los Angeles September 17. A deal is expected to follow shortly after. Proceeds from the issuance will be used to refinance current debt as well as for working capital needs, says Fitch. Morgan Stanley and Santander are managing the sale. While Geo maintains a dominant market position in a fragmented sector, Fitch says, there is refinancing risk, with short-term debt representing 69% of total debt. The homebuilder can find encouragement in its comparables: Urbi’s (BB/Ba3) 2016 is trading to yield 8.9% at the bid, and Homex’s 2015 is trading to yield an 8.5% bid, according to one sellside trader. Fellow homebuilder Javer’s $180m 2014 bond sold in July is trading back up around 98 on the bid side, according to a trader, after being down as low as 95.