Bancomext upsizes bond as investors pile in

jueves 4 de agosto de 2016 13:38 GYT

By Paul Kilby

NEW YORK, Aug 4 (IFR) - An upsized US$700m 10-year non-call five bond from Mexico's Bancomext proved to be a hit on Thursday as yield-hungry investors piled into the Basel III-compliant Tier 2 note.

With order books swelling close to US$3.5bn by late morning, leads upped the size from US$500m and ratcheted in pricing 37bp before launching at a spread of 300bp over five-year Treasuries.

"There hasn't been a ton of Mexican bank paper, so there is scarcity value, and it has a government guarantee," said a syndicate manager away from the deal.

The state-owned entity's subordinated bond certainly meets the needs of investors looking to spruce up portfolios in a world of negative yields.

"People need to find yield and they are happy to take on more complex structures from a high-quality credit rather than go down the credit-quality spectrum," Jason Trujillo, an analyst at Invesco, told IFR.

For Bancomext, the deal helps diversify its funding base and hedges its capital ratio, which has mostly been denominated in pesos.

That is important for a trade bank whose loan portfolio is largely US dollar-denominated, especially as the peso has sunk about 9% against the greenback this year.

Basel III-compliant deals are already rare in Latin America, and the new offering lacks the write-down and write-off provisions typically found in such issues.   Continuación...