Mexico Junk Hotelier Eyes Single Digits

Mexico’s Grupo Posadas plans to pull the trigger on a $200m 2015 bond sale, after a “non-deal” road show last month. Investors expect a yield in the 9%-10% range for the B2/B+ rated hotel operator. An exact date has not been set, with the issuer only indicating “this week” to potential buyers. Posadas is planning additional investor meetings this week, according to a banker on the sale, though there is no formal schedule. The issuer is marking proceeds for refinancing existing debt and JPMorgan is running the sale. “Moody’s expects the notes issuance to be neutral to Posadas’ leverage and to significantly improve the company’s liquidity position by extending the average life of its debt structure and largely eliminating debt maturities for the next three years,” the agency says in a report, adding that it expects to lift Posadas’ rating outlook to stable from negative upon completion of the transaction. Posadas last issued dollar bonds in 2005, retapping for $75m an 8.75% of 2011 issue, which it originally did in 2004 for $150m. It bought back $189m of the notes in April 2008, funded by a MXP1.5bn 2013 domestic issue. Posadas and subsidiaries operate 112 hotels in Mexico, Brazil, Argentina, Chile and USA. A deal would offer support bankers’ and investors’ predictions for a Q1 that mirrors Q4 of 2009 in terms of new high-yield issuance.