Mexican to Test HY Market

Mexico’s Grupo Idesa is preparing to meet investors ahead of a $300m bond sale, what would be the petrochemical producer’s first cross-border deal. The target would be a 2023 note, according to Fitch, which assigns a BB minus rating. Idesa plans to start Wednesday a roadshow visiting London, New York, Los Angeles and Boston through December 9, according to people following the process. Morgan Stanley, HSBC and Scotiabank are managing. The issuer is seeking funds to refinance $195m of existing debt and for general corporate purposes, including capex and other investments. An existing long-term syndicated loan contains covenants that may limit the company’s financial flexibility and in turn put pressure on the ratings, according to Fitch, which adds that Idesa will evaluate alternatives if the bond offering does not take place. Idesa co-sponsored the Etileno XXI project in Mexico with Brazil’s Braskem, which closed a $3.2bn loan package in December 2012. Pacific Rubiales (BB+/BB+/Ba2) has raised funds recently, but there is still some question as to the extent of the appetite in the LatAm bond market for lesser-known or first-time high-yield issuers. Brazil’s CBC (B1) and Peru’s AIH (BB minus) were the last, completing deals of $250m and $115m, respectively, in early November. This week could see a transaction from Hochschild Mining (Ba1/BB+).