Bimbo Bakes Up Dollar Storm

Continuing long-term plans to term out bank debt, Mexican-based baker Bimbo has raised $800m from a 10-year bond, the first dollar-denominated LatAm new issue in more than 7 weeks. Investors seem generally happy with price, although some wanted more since it was a public debut. The Baa2/BBB 2020 bond came at 99.726 with a 4.875% coupon to yield 4.910%, or UST plus 180bp, the tight end of 185bp area guidance. It drew more than $3.5bn in orders, according to bankers on the deal, and had tightened to UST plus 173bp late Wednesday, according to a trader. “It is a superb company, which really performed well during the crisis,” Carlos Legaspy, president of Precise Investment Management, which manages $400m in LatAm bonds, tells LatinFinance. Pricing is fair, he says, though it might have been expected a bit wider given that it is a debut. The deal came about 30bp-35bp wide to Baa2/BBB minus Kraft, the closest comparable, investors say. The approximately 200 buyers were mostly US and mostly investment-grade, say bankers on the deal. However, EM was represented more than in A3/A minus Coca-Cola Femsa’s almost exclusively high-grade deal earlier this year. Bankers on the deal claim it is the second-lowest LatAm corporate yield ever, after KOF. Bankers away from the deal generally viewed it positively. They are encouraged that the door maybe open for other LatAm issuers, particularly if volatility in markets continues to subside. Bank of America Merrill Lynch, Barclays and HSBC managed the sale, which followed a US and UK roadshow. Bimbo aims to reduce leverage to 2.0x at year-end from 2.5x March 31 and also tapped Mexico’s local markets last year for MXP10bn. Bimbo has said it would consider another MXP bond this year, though bankers on the deal stress the issuer was always interested in dollars, especially since 45% of revenues now come from the US. The 144A/Reg S bond is listed in Ireland and guaranteed by the Bimbo SA, Barcel, Bimbo Bakeries USA and Bimbo Foods units. Pro