Latin Finance - January/February 2011 - 38

DEALS of the YEAR
2010

shares, and as of December 1 it had more than 99% of GCT, which is delisted, and 94.8% of Telint. It was working to get past a 95.0% threshold needed to de-list. To make sure it had enough to fund the tenders – in which investors could select shares or cash – AMX brought out two big dollar and peso jumbo debt deals at the beginning of the year. A $4 billion March assault on the debt market tied for the largest-ever from a LatAm corporate and also impressed in terms of pricing. The three-tranche deal repriced the wireless operator’s debt, with the ﬁve and 10 year bonds pricing through the curve and a 30-year piece a few points back. The wireless carrier placed $750 million in 2015 bonds to yield 3.672%, $2 billion 2020s at 5.083% yield, and a $1.25 billion 2040 to yield 6.222%. AMX drew $9 billion in orders, adding the ﬁve-year on reverse inquiry and upsizing the 30-year by $250 million. Citi, JPMorgan and Goldman Sachs managed the sale. “This year they were able to appeal to a high-grade universe, and that compressed their spreads versus global comps,” says a LatAm DCM banker not on América Móvil’s 2010 trades. The $4 billion dollar o ered enough size to remain ﬁrmly on the high-grade dedicated buyside’s radar, along with the likes of Verizon or AT&T, he adds. América Móvil had started the year in its home currency, helping to thaw out a frozen local DCM with 15 billion pesos, and price 40 basis points through Pemex’s curve. A 7.0 billion peso 10-year bond paid 8.60%, or MBonos plus 95 basis points, while Pemex was at 138 at the time. A 4.60 billion peso ﬁve-year tranche paid the TIIE benchmark plus 40 basis points, versus TIIE plus 70 basis points for the state oil monopoly. A 3.28 billion 15-year UDI-denominated bond meanwhile landed at 51.5375% to deliver 100.0000% over 15 years at an annual interest of 4.4100% compound. The price was 100% discounted at a 6.20% annual rate. Banamex, Inbursa and Santander managed the sale, rated AAA on a national scale. The issuer took the opportunity to

venture into new markets, with its ﬁrst sales in Swiss francs, euros and sterling. The 230 million franc March sale yielded 2.13%, or mid-swaps plus 65 basis points, through Credit Suisse and BNP. In June, América Móvil simultaneously hit the euro and pound markets, which ﬁnance o cials had their eyes on, but ﬁnally saw a point when European investors needed diversity given the debt problems there in the early part of 2010. A €1 billion 2017 came at 3.870% yield, or mid-swaps plus 135 basis points, and €750 million in 2022 notes yielded 4.873%. Demand reached €4.3 billion. Deutsche Bank, HSBC and BNP Paribas managed. The £650 million 2030 tranche priced to yield 5.836%, or gilts plus 165 basis points, and saw a book of £1.3 billion. Deutsche and HSBC managed. As with the dollar jumbo, the euro and sterling deals mostly drew in highgrade dedicated investors, as opposed to EM, a trend seen in 2010 among LatAm’s high-quality borrowers as yields plummeted. América Móvil intends to establish euro and pound curves, with treasurer Ricardo Rivera saying at the time that this was just as important as price advantages versus dollars in any single transaction. After having expressed interest in Chile, Colombia and Peru as possible funding sources, the issuer chose to return to Chile’s “huaso” market, which it had opened for foreigners in 2009, this time in inﬂation-linked paper. The 5.0 million unidad de fomento ($193 million) 2035 bond extended the Chilean curve for foreigners. The 4% yield was estimated by analysts to be equivalent to 6% in dollar terms. Done in May when most global markets were shut for LatAm issuers, the issuer withdrew a shorter tranche and downsized from 8.0 million UF to ensure pricing. Banchile-Citi and Santander managed the sale. América Móvil has its choice of markets for 2011. However, bankers also note that the company has ample cash ($14.2 billion) following this year’s issuance to reserve funds for the tender o ers in which investors mostly ended up choosing shares. LF

Corporate Bond
Southern Copper

Digging Deep S

outhern Copper Corporation (SCC) saw jumbo demand for a $1.5 billion April 2010 issue of new 10 and 30-year bonds, which were tightly priced but still traded up. The Grupo México unit operating in Peru was able to bring the yield signiﬁcantly in from early price talk amid nearly $9 billion in orders. The scarce Baa2/BBB/BBB minus miner priced $400 million in 2020 bonds at 99.481 with a 5.375% coupon to yield 5.443%, or UST plus 162.5 basis points, well through 175.0-187.5 basis points talk, which was tightened to 162.5-175.0. It was bid at 106.209 (180 basis points) mid-November, according to Credit Suisse, a joint lead with Goldman Sachs and Morgan Stanley. A $1.1 billion 2040 tranche came at 99.250 with a 6.750% coupon to yield 6.809%, or UST plus 212.5 basis points, the tight end of 212.5-225.0 guidance. The 10-year bonds tightened further late Tuesday, reaching 143-146 basis points, according to traders, with the 30 year hitting 202 basis points-205 basis points. It was bid at 106.712 (198 basis points) mid-November, according to Credit Suisse data. “This is a good story, Peru is a good story, and there is some scarcity value,” says an EM portfolio manager based in New York, who participated despite accepting less yield than hoped for. He notes the issuer was able to tighten pricing as demand swelled on high-grade participation. SCC’s spread was back of Brazil’s Vale, a more diverse credit but the closest comparable. Vale had a 2019 trading to yield around UST plus 112 basis points, and a 2039 around UST plus 178 basis points at the time. “At 25-35 basis points wide of Vale, it’s attractive,” says Eric Ollom, head of EM corporate credit research at Je ries, noting that it should not trade through

38 LATINFINANCE

January/February 2011

Latin Finance - January/February 2011

Table of Contents for the Digital Edition of Latin Finance - January/February 2011