Goldman to Issue Europeso

Goldman Sachs plans to issue up to MXP1bn ($80m) in floating rate Europeso bonds with talk heard in the TIIE plus 90-100bp range. The 3-year RegS only transaction is scheduled for the first week of September and will be listed on the Luxembourg Stock Exchange. The trade is being compared against Nissan Mexico’s MXP2.5bn 3-year, Banco de Credito e Inversiones’s (BCI) MXP2bn 3-year and BNP Paribas’s MXP2bn 5-year. Those bonds were priced anywhere between 40bp-50bp over TIIE, making the Goldman Sachs issue look cheap. But according to a banker watching the trade, this deal is coming wider to compensate for risk perception given that Goldman Sachs’s 5-year CDS is trading at 250bp versus 157bp for Mexican sovereign protection. Still from Goldman Sachs’ perspective, funding costs are still attractive as the notes are expected to be swapped back at Libor+180bp, he adds. The bonds are rated A1/A/A+ on a global scale.