Arca Talks MXP Price, Considers International Debut

Arca Continental is targeting TIIE+20bp-25bp pricing for a new 2018 domestic bond and Mbonos+100bp-110bp for a 2023 tranche, the Mexican bottler’s head of investor relations, Ulises Fernandez, tells LatinFinance. The issuer expects to raise MXP1bn ($80m) in the floating tranche and MXP1.5bn in the fixed, in a sale expected March 20. “We are pretty confident we can achieve tighter spreads on the floating-rate bond as TIIE spreads have tightened, and that development is working towards our advantage,” Fernandez says. The second-largest Coca-Cola bottler in Mexico and in Latin America sees ample liquidity and cheaper costs of issuing in the Mexican market than in international markets, but is also evaluating what would be a cross-border debut as it seeks acquisition financing to expand outside its current footprint. “We would like to visit the international bond markets sooner rather than later,” the official says, adding that Arca has been in contact with banks on the matter. International rates are still attractive for Arca even if more expensive than Mexico, and diversification to new investors outside of Mexico would justify issuance, he says. Mexico accounts for 70% of revenues, Argentina and Ecuador 25% and the US market 5%. In Latin America, it is looking at growth opportunities in Argentina, Peru and Brazil. Last year, it acquired snack food companies US-based Wise Foods and Industrias Alimenticias Ecuatorianas (Inalesca) in Ecuador. Its most recent acquisitions are expected to generate net sales of close to $400m in 2013. Proceeds from next week’s domestic sale will be used mostly for capex and working capital. BBVA Bancomer, HSBC and Santander are managing the deal, rated AAA on a national scale. It would be Arca Continental’s first domestic DCM visit since a MXP3bn deal in 2011.