Mexican Homebuilder Nails Down New Bond

Desarrolladora Homex became the second Mexican homebuilder to tap the dollar market this year in an effort to smooth refinancing humps. With demand hitting $1.5bn from some 144 orders, the borrower was able to tighten from 10.25% area guidance and price an upsized $400m 2020 NC4 at 98.592 with a 9.75% coupon to yield 10.00% or 817.4bp over. The paper was sold principally in the US (72%), but also was allocated to investors in the UK (17%), Europe (6%), Asia (3%) and LatAm (3%). Investor types comprised fund managers (74%), hedge funds (9%), retail and high-net worth accounts (4%), banks (2%) and insurance companies (2%). In the end, the trade came some 40bp wide to the 9.60% secondary level seen on Urbi’s new 10-year NC5s, which have rallied since they were priced in January to yield 10%. Credit Suisse and Deutsche Bank acted as leads. Both Homex and Urbi’s ability to tap the international markets with relatively long tenors has been seen as credit positive at a time when the sector has heavy refinancing requirements, though exposure to dollar liabilities remains a concern. “Heavy reliance on international borrowing in the US bond market exposes the sector to continuing currency risk, with a mismatch between peso-denominated cash flows and dollar denominated debt service,” Fitch says in a recent report. Still such exposure varies from homebuilder to homebuilder depending on their hedging policies, it adds.