America Movil Breaks Mexico Ice

America Movil has priced the first large non-government corporate bond in Mexico’s domestic market this year, raising almost MXP15bn at better rates than Pemex. A MXP4.60bn 5-year tranche pays TIIE plus 40bp, a MXP7.00bn 10-year pays 8.60%, and a MXP3.28bn 15-year UDI-denominated piece pays a fixed 6.20%. Demand topped MXP18bn, according to bankers managing the sale. It came from a variety of investors including private banking, insurance companies, mutual and pension funds. The 2015 floater priced at the low end of initial investor expectations, which ran from about 40bp to 75bp, while the 2010’s spread of Mbono plus 95bp was in line with 75bp-100bp expectations. The UDI-denominated tranche was larger than the up to MXP2bn expected, as the issuer opted to increase it at the expense of the TIIE tranche, says a banker on the deal. America Movil had planned to issue up to MXP15bn, including up to MXP6bn in a 5-year floater, up to MXP7bn in a 10-year fixed rate note. The UDI deal was expected to be privately placed with a handful of investors. Banamex, Inbursa and Santander managed the sale, rated AAA on a national scale. The 3-part sale will be followed by a dollar issue this year, after roadshows in Q2. The issue is the first from America Movil since it announced it will take control of Carso and Telmex via M&A expected to forge the world’s third biggest telecom. In the only other large issuance in what has been a slow-starting year, Pemex sold MXP8bn in 5-year floating-rate notes at TIIE plus 70bp, MXP5bn in 10-year at 9.10%, and a 10-year MXP2bn UDI piece at 4.20%. Though Pemex spreads have improved since the sale, bankers on and away from the deal say the new America Movil bonds generally have priced through the Pemex curve. America Movil has indicated it may follow the peso bonds with issuance in dollars and other currencies later this year. The next large transaction in the Mexican bond market should be an up to MXP5bn deal from state utility CFE.