Mexico breaks new ground with issuer-friendly bond
By Davide Scigliuzzo
NEW YORK, Nov 18 (IFR) - Mexico is poised to become the first Latin American country to sell a bond with new-style collective action clauses (CACs) that make it harder for holdout creditors to fight restructurings.
The issuer-friendly bond contains clauses designed to avoid another Argentina, where a small group of holdouts have embroiled the sovereign in years of legal and financial battles.
While Kazakhstan and Vietnam have taken similar steps, Mexico's move is seen as particularly significant because it is a much bigger borrower in the international capital markets.
Though the clauses were proposed by the International Capital Markets Association and backed by the International Monetary Fund, they are yet to be widely adopted.
"For an issuer like Mexico, the difference between old and new CACs doesn't make a huge difference," said a New-York based syndicate banker not involved in the deal.
"They are doing it more to help establish the new standard set by the IMF and ICMA."
Rated A3 by Moody's and BBB+ by S&P and Fitch, Mexico began gauging investor demand for the US dollar-denominated deal at initial price thoughts of Treasuries plus 150bp area and brought that in to 140bp area (plus/minus 5bp) by midday.
It is aiming to price the deal later on Tuesday. Continuación...