| Peruvian toll road Source: Inyucho |
Peru’s bond market took an innovative step this month, when toll-road operator Norvial sold a PEN365m ($114m) bond through a bookbuilding process.
The dual-tranche debt sale marks the first time in such a structure has been used to price a new bond issue in the Andean region, indicating growing sophistication.
Bookbuilding — by which lead arrangers take orders from investors and then determine the most appropriate price and size for the deal — is common in cross-border bond sales. Norvial’s bond marked the first time it had been used in Peru.
Dutch auction allocation processes have dominated local debt sales in Chile, Colombia and Peru to date. Colombian issuers also have the option of using a fixed-price, first-in-first-served process known as “demanda en firme“.
Bookbuilding is not a choice in neither of these markets, local DCM sources told LatinFinance.
Lead manager Credicorp priced Norvial’s PEN80m 2020 and PEN285m 2027 tranches last week. The deal is guaranteed by toll revenues, a mortgage over the concession and shares. Equilibrium and Apoyo & Asociados rated the bond AA on a local scale.
The tranches were each around 50% oversubscribed, with the books dominated by AFPs, insurers and government institutions. Peruvian construction firm Graña y Montero owns a 67% stake in Norvial, while JJC Contratistas Generales owns the remainder. LF