Mexican Homebuilder Could Lead Huaso Expansion

Mexico’s Corporacion GEO has filed a $100m-equivalent bond shelf in Chile, in a signal that regulatory changes could be working to attract new and more varied foreign issuers into the country’s so-called Huaso market. “We are undertaking this process to open windows to access financing,” Roberto Torres, the homebuilder’s head of capital markets, tells LatinFinance. The credit line registration is for a 10-year UF-denominated bond, with Santander as bookrunner. In Mexico, GEO is unable to issue such lengthy maturities and this has led it to seek out other markets for longer tenors and more attractive funding costs. Though GEO is not yet planning a specific transaction, it sees opportunities available in the Chilean market, and if necessary, could use proceeds from a sale to refinance debt. An issue would be swapped back into MXP. “We are confident that this process [the swap] is simple and accessible,” Torres says. GEO has one BBB Chilean national scale rating, and expects a second. Its rating is BB minus on an international scale. Geo would like longer-term debt, as short-term debt represents 29.1% of its MXP12.7bn total debt. Only 3 Huaso bonds have been issued in Chile – 2 from Mexico’s America Movil and one from Peru’s BCP, but with a reduction in regulatory restrictions last year, it is hoped that more foreign borrowers will be able to feed the country’s growing institutional appetite.