January 30, 2017 / 9:47 PM / a year ago

AA2000 prints tight deal amid strong demand

NEW YORK, Jan 30 (IFR) - Aeropuertos Argentina 2000 (AA2000) kicked off what is expected to be another busy week for LatAm corporate issuance, with a 10-year secured bond that saw books reach over US$2.5bn on Monday.

While the broader tone felt softer on Monday morning, appetite for Latin American risk remains alive and well, even after January’s dollar supply number topped US$21bn last week.

AA2000, Argentina’s largest airport operator, drew a decent crowd of investors who liked the business and the collateral package that included collection rights and passenger user fees.

Thanks to that strong demand, leads were able to upsize the secured bond from US$300m to US$400m and bring pricing in a good 30bp before landing the 6.875% 2027 at 99.888 to yield 6.95%.

The bond, which has an average life of 6.1 years, was largely compared to sovereign and provincial debt, which have similar maturity profiles.

At the final yield, one investor calculated the deal, rated B2/B-, was about 100bp over the government’s interpolated curve. The issuer’s 2022s were spotted with a yield of around 5.5%.

AA2000 offered a pick-up to Province of Cordoba’s 2021s, which were trading around 6.45%, but came tight to the 7.80% yields on 2024s issued by the provinces of Mendoza and Salta.

It also arguably came flat or tight to state-controlled oil company YPF, whose outstanding 2024 was being spotted at around 7.16%-7.02%, according to Thomson Reuters data.

“Final pricing is tight but it is a solid business with low leverage,” said an investor. “And unlike YPF, it is not undergoing headwinds with the price of oil. These guys are stable.”

There are another six LatAm issuers making their way to market in coming days, including possible local currency trades from Argentina’s Banco Supervielle and Peruvian mortgage banks Fondo Mivivienda.

Banco Supervielle has started marketing a peso denominated 144A/RegS senior note, with a 3.25-year average life, while Mivivienda is contemplating either a sol-denominated global depositary note and/or a dollar trade.

“Most Latin American issuers would like to do as much as they can in local currency,” said a syndicate banker. “As the market feels strong, it gives you a better chance to get local currency bonds sold in an international format.”

Also on the road are Argentina infrastructure firm CLISA (B-/B-), the Province of Entre Rio (B-/B), and Brazilian railroad operator Rumo (BB-/BB-).

Mexican food company Sigma Alimentos is also approaching European investors about the possibility of issuing in euros. (Reporting By Paul Kilby; editing by Shankar Ramakrishnan)

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