Latin American telecom infrastructure company ATP Tower is taking another run at the primary bond market just six months after it pulled a similar offering last summer.
The high-yield issuer, which owns and operates cell towers in the Andean region, is returning with a five to seven-year senior secured bond to take out its existing 2026s, the same basic structure it originally sought in July.
Moody's said a report on Tuesday that ATP was seeking up to US$500m in the offering. However, the borrower sought US$700m through the bond sale that it abandoned last year, citing unsatisfactory pricing levels.
"They tried to raise some incremental money in the [old] deal but they didn’t have a lot of good answers as to what they were going to use the money for," said an investor on Wednesday.
"They assumed the market would lend them whatever they wanted and that was not the case. There was a deal to be done but at a price that didn’t make sense to them."
ATP did not immediately respond to a phone message seeking comment about the offering.
Fitch downgraded the credit to BB- from BB in April last year with a negative outlook, pointing to the company's high leverage and looming debt maturities.
With this latest transaction, ATP once again hopes to take out its US$375m of outstanding 2026s through a tender that expires on January 28.
Those bonds were issued in 2021 when dollar rates were much lower, allowing ATP to lock in an attractive 4.05% coupon.
The cell tower operator now faces a costlier financing environment, not least because US Treasury yields have spiked since its last attempt to access the market in July.
Today, even investment-grade cell tower operators in the US have four and five-year bonds trading a good 100bp wide to the levels ATP achieved in 2021. Securities with those maturities recently issued by Triple B rated American Tower and Crown Castle were changing hands on Thursday at around 5.2%, according to MarketAxess data.
And closer to home, Sitios Latinoamerica, a Mexico-based company that operates telecom infrastructure in Latin America, issued a Baa3/BBB- rated five-year issue in November to yield 6.08%.
Moody's, which assigned a Ba3 rating to ATP's latest deal, said the company plans to use proceeds to repay all existing debt, take out money drawn under a revolver and fund expansion plans.
If successful, the liability management exercise would prevent leverage from jumping above 7x, a threshold trigger for a downgrade, the rating agency said.
The company is offering to buy back the 2026s at 99 cents on the dollar. Those bonds traded up closer to that level in late July when the company had offered the same terms. But fell back to 96.22 to yield 7.178% earlier this month, according to MarketAxess data.
Dealer managers on the new tender are Goldman Sachs, JP Morgan, Deutsche Bank and Scotia Capital, the same banks that led the last bond.