Coke Femsa Fizzes Through Sovereign

Mexico’s Coca-Cola Femsa (KOF) has sold its first dollar bond since 1996, upsizing to a thirsty crossover base and pricing through the sovereign. “For the first time in a while dollar bonds were cheaper [than Mexican pesos],” Ian Craig, KOF’s director of corporate finance and treasury tells LatinFinance. He adds that KOF had been monitoring the markets for several months and began to see attractive levels in December. Those involved in the trade claim it was the lowest-ever pricing on a 10-year LatAm dollar credit. The A3/A minus $500m bond was upsized from $400m on $2.5bn in demand, bankers on the deal say. The bulk went to high-grade investors, looking for a pickup to similarly-rated developed credits. EM accounts saw no incentive to participate in paper yielding 55bp inside UMS. The largest bottler of Coca-Cola beverages in LatAm priced at 99.491 with a 4.625% coupon to yield 4.689%, or UST plus 105bp, the tight end of 110bp area guidance. It was heard trading up around 1.5 points at the close Tuesday. Craig estimates the bottler could have sold $100m more, but was satisfied with growth to $500m. The deal went to about 150 accounts, he says, with the “great majority” US high-yield. About 95% placed with US-based accounts, a banker managing the deal says, with 55% going to asset managers and 30% to insurance companies. BofA-Merrill Lynch and Goldman Sachs were the leads, following a 4-day “non-deal” US road show last month. Proceeds are earmarked for refinancing debt and general corporate purposes. Craig says KOF has $300m in maturities across all currencies to meet this year. The bottler’s rating is higher than Mexico’s due to 31.6% ownership by Coca-Cola and a history of financial support to KOF from north of the border, says Fitch. It is 53.7% owned by Femsa SA, which last month exchanged 100% of its Femsa Cerveza beer unit for 20% of Heineken. KOF sold $200m in 10-year bonds in 1996, according to Dealogic and has borrowed 5 times since in the Mexican domestic