Telefonica Finanzas Mexico – Telefonica of Spain’s Mexican business unit – has finally closed its 4- and 10-year floating and fixed rate note auctions raising Ps6bn (US$473m).
This was the company’s first issue in Mexico since 2006, when it raised…
Telefonica Finanzas Mexico – Telefonica of Spain’s Mexican business unit – has finally closed its 4- and 10-year floating and fixed rate note auctions raising Ps6bn (US$473m).
This was the company’s first issue in Mexico since 2006, when it raised Ps4.5bn (US$355m) in floating-rate notes with a September 2010 maturity.
The broking community grumbled about the spreads being much lower than expected. This was most acute for the 2014 bonds. But because of a lack of newly-issued domestic corporate debt, the two bonds were oversubscribed, with the floating-rate bond being 1.4x oversubscribed and the fixed trance being 1.3x oversubscribed.
Telefonica raised Ps2bn (US$156m) on the sale of its 2020 fixes rate notes. This was priced at 8.07% or Mbonos plus 134bp. A further Ps4bn (US$317m) was raised on Ps4bn on its tranche of 2014 floating-rate notes, priced at TIIE plus 55bp.
According to a major Mexican investment participant: “The pricing was too tight and did not take into consideration the potential risk [from Telefonica’s proposed] Vivo acquisition,” wrote Latin Finance.
Both tranches hit the mid-range of the pre-issue guidance, of TIIE plus 45bp to 65bp for the 2014 floating-rate note and 125bp to 145bp over Mbonos for the 2020 bond.
A banker associated with the deal told Latin Finance: “We were hoping to price at the tight end of guidance but this was not possible due to the recent international volatility that has affected the Mexican market.”
Local portfolio managers had hoped that the range would be closer to Mbonos plus 160bp to 180bp and TIIE plus 100bp to account for the M&A risk.
However one Mexican investor admitted: “The severe shortage of names in the domestic corporate space meant they were able to get the deal away at this level,”
BBVA Bancomer, Santander and HSBC managed the transaction.
