Beyond Japan

Apr 1, 2005

Latin American issuers have built up a following among wealthy investors in Hong Kong and Singapore – as long as commodity prices don't plunge.

When Mexican tortilla maker Gruma sold a $375 million perpetual bond last November, 42% of its investors were from Asia. That's remarkable given that Gruma – the world's No. 1 producer of corn flour and tortillas – is relatively unknown outside Latin America and the US.

Gruma was able to develop a strong base of new investors from Hong Kong and Singapore. These investors, mainly private bank clients and Asian banks, were drawn by the hefty 7.75% coupon. That coupon must be paid for eternity unless, after five years, Gruma exercises its quarterly option to call the bond.

But it wasn't the coupon alone that drew in buyers. These investors also showed that while they weren't experienced with tortillas, they appreciated a well-run company. Gruma's pre-tax income grew 36% to $90.6 million in the first nine months of 2004, compared to $65.5 million during the same period in...

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