Televisa and Suzano bring some life to LatAm primaries

Mexican media giant Televisa and Brazilian pulp and paper firm Suzano raised a combined US$2bn of bonds on Tuesday, revitalizing a Latin American primary market that had been in the doldrums.

By Miluska Berrospi

NEW YORK, May 22 (IFR) - Mexican media giant Televisa and Brazilian pulp and paper firm Suzano raised a combined US$2bn of bonds on Tuesday, revitalizing a Latin American primary market that had been in the doldrums.

Better market conditions following the recent bout of trade-induced volatility enticed the two blue-chip names from the sidelines, helping bring weekly supply up to US$2.3bn.

That is higher than the previous week when Chile raised US$1.6bn equivalent through a Euroclearbale local bond tap, and the week before that when Paraguay's Bioceanico sold a sole US$732.2m bond.

Recent volatility notwithstanding, the backdrop still looks attractive for solid investment-grade names, as investors have money to put to work and yields in the US Treasury market remain low.

"The market is wide open, interest rates are low. It's completely open," said a senior DCM banker.

RARE MEXICAN BOND

Televisa's deal, rated Baa1/BBB+/BBB+, caught the market's attention given the dearth of supply out of Mexico amid ongoing concerns about the economic policies of the new populist government of President Andres Manuel Lopez Obrador.

The US$750m 30-year trade was just the second investment-grade issuer out of that country to tap the dollar market this year after telco America Movil tapped in April.

It was also Televisa's first dollar deal since 2015 when it issued 2026 and 2046 bonds.

Starting at initial price thoughts of US Treasuries plus 270bp area, leads were able to tighten to guidance of T+250bp (+/-5bp) after books peaked at US$2.55bn.

Nevertheless, investors appeared to push back at that level, leaving the borrower falling short of a full tightening to price the deal at 98.588 to yield 5.345% or T+250bp on a final book of US$1.9bn.

That was about 13bp over the existing 6.125% 2046s, which were trading at around T+237bp but at a high dollar price of around 113.00.

As a comp, leads preferred to use the 5% 2045s which were trading closer to par or at a T+235bp, bringing fair value at around T+245bp after accounting for the curve extension, said a banker.

It was also an improvement on the last time Televisa issued a 30-year bond in 2015 when it came at a yield of 6.147% or T+312.5bp.

SUZANO RETURNS

Suzano, meanwhile, returned to the dollar market after just a four-month hiatus, raising US$1.25bn through a two-part trade.

The pulp and paper firm was able to tighten pricing 15bp-25bp from start to finish after garnering demand of close to US$4bn.

The US$250m tap of its 7% 2047s was printed at T+340bp, while a new US$1bn 10-year was priced at a yield of 5.18% or T+275bp.

The deal, whose proceeds will be used to refinance debt, follow a string of dollar deals from the company as it sought to fund its acquisition of Fibria.

"Suzano is a strong global player," said a UK-investor following the transaction. "In our head we look at this thinking it can price through the sovereign."

Even so, Suzano, rated BBB-, still came with a decent pick-up to the sovereign curve, where the 2029s and 2047s were trading at around T+240bp and T+290bp, according to Refinitiv data.

(Reporting by Miluska Berrospi; Editing by Paul Kilby)

((Miluska.Berrospi@thomsonreuters.com;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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