Elekra Seeks $350m to Fund Capex: Fitch

Fitch has put a $350m size on Grupo Elektra’s new RegS 7-year NC4 bond after rating it BB minus yesterday. This comes as the Mexican retailer wraps up roadshow today in New York, London and Hong Kong with investors heard discussing mid-to-high 7% pricing. Grupo Famsa, another Mexican retailer, is being seen as the main comp, with its $200m of 11% 2015 NC3s being quoted at around 8% area on Friday, though it has lower B/B+ ratings and a shorter tenor. Sister company TV Azteca, rated BB minus, is seen as another possible pricing gauge with its RegS only 7.50% 2018 trading Friday at 7.12%-6.92% Friday. As positives, Fitch cites the company’s strong market share, considerable brand recognition and its geographic diversification in both the retail and finance space though Banco Azteca. Debt to Ebitda on a consolidated basis for the last 12 months ending June 30, was 9.9x versus 10.0x last year, while with the standalone retail business it was above 2x, the agency says. Fitch sees this climbing to 2.5x by the end of 2011 due to additional financing to cover capex needs, including this issue. For 2011, capex will reach around MXP2bn, it adds. Leads on the issue are BCP, Jefferies and UBS. Elektra is tapping the international markets after an over 10-year absence. It last issued a foreign bond in 2000 when it priced a $275m 8-year NC4 at par to yield 12% through Warburg Dillon Read. At the time, the company was rated B2/B.