América Móvil has long been a favorite among bond investors. In part, that is a result of its position as Latin America’s largest wireless carrier. But it is also thanks to its knack for skillful, well-timed market operations.
Over the 12 months to the end of March, América Móvil tapped bond markets in multiple currencies, including an exchangeable note and a euro-denominated security. The transactions placed it ahead of its peers to win the Corporate with the Best Bond Market Strategy: LatAm High Grade category.
In May 2015, América Móvil sold a €3 billion ($3.13 billion) exchangeable bond, which gives the company the option to pay back the principal in cash or stock in KPN, a Dutch telecommunications firm. The shares would be valued at a 45% premium to KPN’s weighted stock price at the time the bond was sold. The valuation implies AMX could settle the bonds with 612 million shares in the Dutch telecom. The figure is equal to 14.3% of the Dutch company, and two-thirds of América Móvil’s KPN holdings.
América Móvil also has the option to buy the bonds back after 2.5 years if KPN’s share price rises 130% or more over the premium.
“The market very much liked the option to obtain a bond with very good risk,” says Carlos García Moreno, América Móvil’s chief financial officer. “It also gives it an upside if the shares go up.”
The transaction was well received, with around 160 investors putting in orders for €3 billion worth of paper shortly after the deal was announced.
América Móvil was also the first Latin American corporate borrower to issue a euro-denominated bond in 2016. In March, it sold a dual-tranche €1.5 billion eight- and 12-year note. The transaction drew around €2.7 billion in demand.
“Volatility was strong in the market starting September,” says García Moreno. “The markets remained closed the majority of that period, so when we saw an opportunity in March, we saw a good window.”
Lead managers priced the eight-year tranche at 120 basis points over mid-swaps, at the lower end of the 120 basis points to 125 basis points guidance range. The 12-year tranche was also priced at 150 basis points over mid-swaps, clinching the lower end of the pricing guidance. LF
WINNER: América Móvil