CFE Refreshes Curve

Mexico’s Comision Federal de Electricidad (CFE) took advantage of improving sentiment following the end of the US shutdown, to raise $1.25bn in new bonds. The government electricity monopoly drew $7.7bn in orders for the 2024, according to people following the sale. Starting wide at UST plus mid-260s talk, CFE slashed guidance to 240bp (+/minus 5bp) before launching at 235bp. The Baa1/BBB/BBB+ bond priced at 99.427 with a 4.875% coupon to yield 4.948%. “Price talk started cheap offering around 40bp, and the issuer walked down to 240bp to finally offering a tight concession. Despite tightening, investors feel comfortable with the credit risk even though a lot of value has been taken away,” says an investor following the trade who spotted CFE’s 2021 bonds trading at a g-spread of 222bp and calculated a 13bp concession. Bankers familiar with the transaction saw an 8bp concession versus a g-spread of 227bp for the 2021. The deal attracted high quality accounts from the US, Europe, Latin America, according to people following. Barclays, Citi and Goldman Sachs managed the deal, which followed three days of investor updates. The transaction follows a $900m-equivalent domestic market bond in June and a $750m 30-year international bond sold last year. Ahead in the DCM, Banco do Brasil is still considering a new euroyen bond, and Brazil’s JBS and Chile’s Entel are meeting investors ahead of deals that could arrive as soon as next week.