Buyside Sweet on Peruvian HY Bond

Corporacion Azucarera del Peru (Coazucar) has priced $325m in 2022 NC5 bonds as investors filled a book that reached around $4.5bn, demonstrating again that appetite exits for strong LatAm high-yield credits. Coazucar was able to use the scarcity of Peruvian credits in particular to generate significant interest at initial low to mid-7% whispers before ratcheting down pricing to a final 6.5% yield, reminiscent of compatriot Ajecorp’s $300m sale in May. “Coazucar has high margins, low leverage and is a leader in its space,” says a participating New York-based EM portfolio manager. The sugar and ethanol unit of Grupo Gloria priced the senior secured BB/BB+ bond at 99.091 with a 6.375% coupon to yield 6.500%, at the tight end of 6.625%-area guidance, revised from 7.000%-area. The bonds were trading up a point in the grey late Thursday, according to investors. “It looks expensive from whispers of low to mid 7s to revised guidance of 6.625% area, but demand is there for Peruvian corporates,” says a participating London-based portfolio manager. Leads used BB/BB+ beverage distributor Ajecorp’s 2022 NC5 bonds, trading to yield 6.00%, as a direct comp. About 250 accounts participated, according to a banker on the deal, including asset managers, local investors, retail investors, private banking and hedge funds. Coazucar is raising funds to refinance existing debt, to make land purchases and for capital expenditures. The company has an Ebitda margin of 36.8% and net debt to Ebidta of 1.11x. It operates five mills and eight distilleries located in Peru, Ecuador and Argentina, crushing 8.4m tons of sugarcane per year. Bank of America Merrill Lynch and Citi managed the sale. “Investors focus on individual stories and not every high-yield name that emerges, but recent high-yield issuance is encouraging and should encourage more BB issuers,” says a banker away from the deal. It remains to be seen how many more of the region’s borrowers could emerge prior to the annual August vacat