NEW YORK, Nov 30 (IFR) - Mexican real estate investment trust FIBRA UNO (FUNO) struggled to gain momentum on a new 10-year bond on Monday and was forced to downsize the trade.
On Monday, the Baa2/BBB rated credit announced a US$500m 10-year, after sitting in the pipeline for close to three months, with initial price thoughts of 312.5bp over Treasuries.
At that level, the bonds provided a new issue concession of anywhere between 35-25bp over the existing 2024s, depending how bankers calculated for the curve extension.
And while many thought talk provided a decent premium over the 275bp-280bp G-spread on underlying 2024s, bookbuild was slower than that on the other eight high-grade issuers in the market on Monday.
FUNO finally priced a smaller than expected US$300m deal at 99.303 with a 5.25% coupon and spread of 312.5bp to yield 5.338%.
And while the coupon was the same as the one Fibra Uno achieved when it last printed its 2024 in January 2014, spreads were certainly wider than the 250bp it locked in on that occasion.
For some, more generous pricing is currently required if Latin American borrowers wish to inspire accounts who are largely lying low after a tough year for emerging markets.
“It is a good credit, but if you announce such tight pricing, you are setting yourself up for disappointment, especially this time of the year when everyone is expecting an increase in US rates,” said a DCM banker.
Still, the REIT should be able to make up for any shortfalls in the local bond market where sources said it is about to file for a local issue - a three-year floater and a reopening of its fixed-rate 2025s. (Reporting By Paul Kilby; editing by Shankar Ramakrishnan)