El Salvador’s Grupo Unicomer hit a wall in January 2014, when it postponed plans to issue a cross-border bond. The retail group had lined up a seven-year, $300 million trade, but perceived vulnerabilities in the group’s financial unit and a troubled day in the bond markets halted what would have been its first international transaction.

More than three years later, Unicomer made its debut in the cross-border market in March 2017, selling a $350 million seven-year bond and raising funds to pay debt due between 2017 and 2019. The underwriters BCP Securities, Citi and Credit Suisse opened the trade with talk of a coupon above 8%, but then priced the notes at 7.875%.

Unicomer intrigued investors with its plans to expand into untried markets. It also assured bond buyers with a commitment to lower its debt levels. The balance between raising cross-border financing to fund growth and also improve the company’s debt profile make Unicomer the winner of LatinFinance’s award for Central American/Caribbean Corporate with the Best Capital Markets Strategy.

“We switched short-term debt to long-term, and now our strategy going forward is to deleverage for one year and then take advantage of any opportunity for expansion,” Unicomer chief executive Mario Simán tells LatinFinance

With its first cross-border bond in the books, Unicomer will look to grow through acquisitions over the next two to three years, Simán says. The company could invest in insurance products, mobile phone services and other retail chains, such as optical stores. It could also move into new markets, such as Colombia and Peru, by 2019.

“I prefer to do acquisitions over greenfield opportunities,” Simán says. “Doing this, you see the potential in the target and you can add your own strengths and get extra leverage. But if you go greenfield, you could get hurt.”

In Unicomer’s established markets, Simán mentions the chances to grow, especially in Paraguay and Ecuador. “The macroeconomics of Central America are stable, but Paraguay in particular is experiencing nice growth, and we have a huge potential there.”

Investors understand Unicomer’s expansion plans and feel more comfortable with the company’s objectives, Simán says.

“Our diversification is not only geographic. We are also present in industries that contribute to that country’s GDP,” he says.

Unicomer invests in tourism in the Caribbean and Costa Rica, for example, as well as textile exports and remittances in Guatemala, Simán adds.

Other corporate issuers from Central America have not rushed to the cross-border bond market, and even the government of El Salvador has struggled to issue as much debt as it would like, thanks to congressional gridlock. But Simán says Unicomer has separated itself from the sovereign’s plight because of the company’s diversified portfolio and broad geographical reach.

“Costa Rica is our largest territory in terms of revenues. Ecuador and Jamaica are also important,” he says. “This was seen by rating agencies and the investors.”

S&P Global Ratings, which assigned a BB- rating to Unicomer’s 2024 notes, said the transaction was buoyed by an unconditional guarantee from company subsidiaries, which accounted for 86% of Ebitda last year. 

Fitch Ratings said Unicomer’s leading position in most of the countries where it operates helped the company get a BB- rating. Unicomer has achieved stable earnings from a business model that targets low-income and middle-income consumers, leaving it well placed to meet its medium-term objectives, Fitch said.

Founded in 2000, Unicomer operates more than 30 retail chains in 24 countries, including La Curacao in Central America, Gollo in Costa Rica and RadioShack franchises in Central America, South America and the Caribbean. LF