Flash Fixed Income Report /

Mexico's Alpek to come to the bond market

    Rafael Elias
    Rafael Elias

    Director, Latin America Credit

    Tellimer Research
    5 September 2019
    Published byTellimer Research

    Mexico's Alpek S.A.B. de C.V., the petrochemical subsidiary of the Mexican Conglomerate Grupo Alfa S.A.B. de C.V., and a leading company in the production and commercialisation of petrochemical products, rated Baa3/BBB-/BBB-, has started investor meetings in order to issue a new senior unsecured bond with "intermediate maturity". The roadshow ends on 10 September.

    There are still no details on the size or tenor, or price guidance; however, as reference, the company has two bonds outstanding:

    1. A US$650mn 4.50% senior unsecured bond due 2022 (Baa3/BBB-/BBB-), which trades at cUS$104.751 (ALLQ) to yield c2.93% (g-spread 151bps; z-spread 156bps); and
    2. A US$300mn 5.375% senior unsecured bond due 2023 (Baa3/BBB-/BBB-), which trades at cUS$108.522 (ALLQ) to yield c3.04% (g-spread 164bps; z-spread 170bps).

    Assuming an intermediate tenor of 10 years, and an amount issued cUS$500mn, we believe  the bonds could be priced in the mid-5% level to account for the longer maturity, and assuming no concessions.

    The bonds are expected to be issued next week, depending on market conditions.