|
|
| América Móvil´s €2.1 billion inaugural hybrid | |
| Bookrunners | Barclays, BNP Paribas and Deutsche Bank |
| return to the Deals of the Year 2013 index | |
In September América Móvil confirmed its reputation as the most innovative Latin American issuer in the international debt capital markets with its inaugural hybrid transaction. The €2.1 billion-equivalent had three tranches across two currencies (the deal had a sterling tranche) and was designed to achieve a 50% equity credit from the rating agencies to strengthen its capital base. This was the first by any Latin American corporate issuer to achieve the objective. The result was a transaction that strengthened the company’s capital base and supported its senior credit ratings and was cheaper than issuing equity. Also, unlike issuing equity, the deal is tax deductible and incurs no shareholder dilution. The structure also provides América Móvil with the flexibility to defer interest without constituting an event of default.
The deal’s execution matched the excellence of its structure: despite a volatile market backdrop América Móvil became the first issuer in history to place a three-tranche (all 60 years) hybrid using intraday execution – as well as becoming the largest ever hybrid issuance to use intraday execution. The issuer avoided the roadshow approach and instead opted for a global conference call and select individual investor calls on the morning of the announcement, enabling it to beat a strong pipeline of supply coming to the market. The documentation and structuring period was also aggressively short – just one-and-a-half weeks.
Bankers working on the transaction reported considerable price discovery, using comparables such as hybrids from Volkswagen. The deal priced in line with official guidance (yields of 5.250% for €900 million 2073 NC5, 6.517% for a €550 million 2073 NC10 and a £550 million 2073 NC7 that yielded 6.478%) and each bond traded up between five and 10 basis points in early secondary trading.
The company also become one of only two Latin American issuers to tap the euro/sterling markets in 2013.
