Background
In January 2017 Sigma Alimentos sought to tap the market for a 7-year transaction in a liability management exercise aimed at refinancing existing debt and extending its maturity profile.
This led the company to successfully price a €600mn 7-year bond in the international capital markets, the company’s first bond in Europe.
Transaction Breakdown
The lead managers enlisted by Sigma Alimentos launched an aggressive marketing and bookbuilding effort for a 7-year benchmark sized transaction that began on 30 January with a 3-day, 2-team roadshow targeting mainly high-quality investors in London, Munich, Frankfurt, Zurich, Amsterdam, and Paris.
Following the roadshow, the 7-year transaction was announced on 2 February at 8:30AM GMT with initial price thoughts of MS+250-262.5bp.
A strong orderbook allowed the lead managers to revise guidance, which was announced to the market at 10:45AM GMT, at MS+237.5-250bp. Following the revised guidance, the top end of the orderbook, dominated largely by European high-quality EM investors, remained more or less unchanged.
High demand for the notes allowed the company to launch an upsized €600mn 7-year transaction at MS+225bp, representing an impressive 37.5bp tightening. The notes were oversubscribed about 4.3x, allowing the company to secure its lowest coupon ever (2.625%). The transaction also allowed the company to extend the average tenor on its debt from 5.9 years to 7.1 years.
European investors dominated the book, with about 30% of the notes placed with accounts in Germany, 17% with accounts in France, 13% with accounts in the UK, 10% in Italy, 8% Switzerland, and 3% Spain. Investors in the US took 4% of the notes, while 9% was placed in other regions.
By type, asset managers scored the biggest chunk of the private placement – about 74%. Pension funds and insurers took 9%, agencies 4%, private banks 4%, and other investors 9%.
The transaction, successful on a number of fronts, has helped create a path for other Mexican borrowers – and borrowers across Latin America – into the European private placement market.
