Grupo Bimbo S.A.B. de C.V. (BIMBOA) is set to come to the market today with a US$500mn 30-year bond, expected to be rated Baa2/BBB/BBB. Initial price guidance is at T+240bps.
The proceeds will likely go towards repurchasing a portion of the firm's outstanding US$800mn 4.875% senior unsecured bonds due 2020 (Baa2/NR/BBB), which trade at US$102.278 (ALLQ) to yield c2.05% (to worst) for a g-spread of 27bps and a z-spread of 20bps.
We believe that, at the indicated price guidance, the new bonds are tight. However, we still expect strong demand given the name's high quality. In light of the current market volatility, there might be a flight to quality and, given its long tenor, the bond appears "tailor-made" for pension funds – we believe they will be the main takers of this security.
We expect the bond to price today, if market conditions allow.
We do not have active coverage of Grupo Bimbo and, therefore, do not have a recommendation on this credit.