Flash Fixed Income Report /

Peru's BCP and Mexico's BBVA Bancomer to issue new bonds

    Rafael Elias
    Rafael Elias

    Director, Latin America Credit

    Tellimer Research
    29 August 2019
    Published by

    Peru's Banco de Credito del Peru (BCP) is expected to come to the bond market with USD and PEN deals. The bank's roadshow will take place on on 29 August-5 September. No details have been given regarding size, tenor or initial price guidance. However, these issues coincide with BCP's tender offer for its outstanding US$800mn 5.375% bonds due 2020 (Baa1/BBB+/BBB+), which trade at cUS$103.544 (ALLQ) to yield c1.90% (to worst) for a g-spread of 18bps and a z-spread of 14bps.

    Given the size of the tender, we would expect the new dollar issue to be cUS$1bn, to have an intermediate maturity of c10 years and price at 3.0-3.5% (assuming the new bond is senior unsecured and not subordinated). It would take as a reference the bank's outstanding US$720mn 6.125% subordinated bond due 2027 (Baa3/BBB/BBB), which trades at cUS$108.213 (ALLQ) to yield 2.87% (to call) for a g-spread of 140bps and a z-spread of 141bps.

    In Mexico, BBVA Bancomer S.A. Institucion de Banca Multiple (BBVASM) has said investor meetings will run from 29 August-4 September for a potential 144A/RegS USD-denominated, Basel III-compliant subordinated preferred Tier 2 capital bond, expected to be rated Baa3/NR/BB+ (the bank itself is rated A3/BBB+/BBB+). The proceeds are expected to be used to retire outstanding Basel II subordinated bonds and to strengthen the bank's capital ratio.

    For pricing comparison, BBVASM's US$1bn 5.125% subordinated bonds due 2033 trade at cUS$97.058 (ALLQ) to yield 5.57% (to call) for a g-spread of 408bps and an i-spread of 419bps. Its US$200mn 5.35% subordinated bonds due 2029 trade at cUS$100.396 (ALLQ) to yield 5.26% (to call) for a g-spread of 385bps and an i-spread of 392bps. And its US$1bn 7.25% junior subordinated 7.25% bonds trade at cUS$103.084 (ALLQ) to yield c2.33% (to worst) for a g-spread of 50bps and a z-spread of 39bps.

    Given the above, and assuming a 10-year US$1bn subordinated deal, we would expect the new bonds to price at 4.75-5.0%.

    We do not expect concessions on either of the two deals.