Axtel Targets Low 9% on Bond

Mexico’s Axtel has put out official yield guidance of 9.00%-9.25% for a new 2019 NC5 bond that is expected to launch this morning. The telecom finished a roadshow supporting the Ba2 deal, expected to be sized at $300m, yesterday on the US West Coast. Such a yield would represent “a relatively small concession for a high yield issuer,” says Barclays, spotting the outstanding 2017s at 8.8%, and 2014s from comps Maxcom and Alestra at 9.3% and 11.5%, respectively. The telecom is raising funds to buy back 11.00% 2013 notes, offering 105.75% of the principal including a consent payment equal to 3.00% in a process launched through Credit Suisse closing September 30. Proceeds in excess of the repayment of the tender will be used for general corporate purposes and partial repayment of a 2012 term loan. The new bonds include a change of control put at 101, and among the covenants is a consolidated leverage ratio of less than 4x. Credit Suisse and Bank of America-Merrill Lynch are managing the sale. Axtel shares rose last week on speculation it may be a takeover target by a larger operator. As for other corporate issuers on tap this week, fellow Mexican high-yield issuer Geo is expected to bring a $200m 5-year BB minus deal in the mid 9% area, according to investors. On the high-grade side, a $750m BBB/BBB- 10-year offer from Brazil’s Votorantim is expected to price at 7% or under. On Monday, split-rated CSN sold $750m in 2019s at 6.875%, a well oversubscribed deal that rallied on the break.