Market creator
In a year when Latin American issuers spent most of their time monitoring highly volatile international markets in search of a window in which to issue, America Movil strengthened the development of a peso market for international investors.
The Mexican telecoms service provider in June raised Ps17bn (US$995m) with a 9.5% seven-year senior global green note issue, the largest global local-currency deal by a Latin American corporate issuer.
The deal, which was marketed to both international and local investors, was the first in a Ps130bn programme to issue dual-registered peso notes (SEC and local securities regulator) over a period of five years, which is part of a plan to adjust the composition of the company’s debt stock relative to its revenue stream.
With the programme, America Movil also expects to create a peso market for international buyers by making its peso global bonds, with tenors ranging from five to 12 years, more liquid.
“Under this programme, we expect to be in the market two to three times a year, with a view to having a well-defined curve that is liquid, partly because we will be issuing regularly and partly because we have retained a group of market-makers that are also the underwriters of the programme,” said Carlos Garcia Moreno, CFO of America Movil.
BBVA, Citigroup, Goldman Sachs, HSBC, JP Morgan, Morgan Stanley and Santander are the underwriters under the programme.
Prior to the June transaction, America Movil held investor meetings which reached accounts in New York, Boston, London, Zurich and Geneva, as well as accounts in Asia and Latin America. The book was over Ps23bn, with 45% of orders coming from foreign investors and 55% from locals. Around 35% of allocations went to US accounts, and over 9% to EMEA investors, while 54% went to Mexican accounts.
For America Movil, the participation of Mexican investors was key because they anchored the transaction.
“International investors appreciated having that local support,” said Maria Fernanda Espino, vice-president of debt syndicate at HSBC.
The notes priced at 95bp over the Mexican government Mbonos, making the deal extremely attractive to international investors, given that America Movil is rated above the Mexican government and its US dollar and euro bonds trade inside the Mexican government curve.
Nevertheless, the cost of funding was inside the company’s US dollar curve, according to HSBC.
Garcia Moreno believes other Mexican corporates are going to follow America Movil’s example.
“We are going to be a good reference for corporates because we are going to have a liquid curve, and having a good benchmark is always important for the pricing of securities,” he said.
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