Mexichem Talk Bond at 8.5%

Mexichem is whispering 8.5% yield on its new 2019 bond, according to investors, expected to price today or Wednesday. The Mexican chemicals maker is targeting $350m, to fund an undisclosed future acquisition. Bank of America-Merrill Lynch is leading the Ba1/BBB minus deal. RBS views the deal as essentially a housing play, it says in a note, as about 70% of Mexichem’s net sales come from the homebuilding and construction industries. “We like this bond at this level, however the upside appears to be limited,” the shop says. It says the talk puts the bond about 20bp inside Homex’s 2015 (8.7% adjusted for duration) which it says is not appropriate compensation.