Posadas prices rare junk bond in rocky day for LatAm
By Paul Kilby
NEW YORK, June 25 (IFR) - Mexico's Grupo Posadas printed a rare junk bond on Thursday, marking Latin America's first sub-double B offering in three months.
Posadas, a hotel chain with brands such as the Fiesta Americana, priced a US$350m seven-year non-call four bond at par to yield 7.875%, the tight end of initial price thoughts of 8% area.
The region hasn't seen a corporate deal with such a low rating since YPF (Caa1/CCC) came to market in April, and many bankers had thought the deal would be a tough sell.
Posadas (B2/B/B+), which has struggled with debt burdens in the past, faces a somewhat brighter outlook as its hotel business should benefit from a stronger dollar and a recovering US economy, said a banker.
The bond is also thought to have enjoyed a nice underlying bid from a tender for its outstanding 7.875% 2017s, which this deal is financing.
"It is positive for the market to have a lower rated bond get done," said a banker. "Everyone has seen the Fiesta Americana in Cancun, so there is a comfort level and they paid a juicy premium on the tender."
Holders who tendered by July 24 received US$1,060 per US$1,000 principal amount. Thereafter but before final expiration of July 10, holders get US$1,030. Both those levels are higher than the 102.70 mid-market price seen on the bonds before the tender was announced on June 11.
However, finding comps for a single B name like Posadas proved tricky in LatAm where similarly rated credits are trading anywhere between 6.10%, as is the case with cement company Cemex's new 2025s, to the 14% secondary yield seen on Brazilian airline Gol's 2022s. Continuación...