Gridlock in the Bond Market
Demand from institutional investors in Mexico's bond market outstrips supply. There are just not enough high-quality bonds around, but this could be changing.
For years, Enrique Coppel, who runs a popular family-owned
Mexican chain of clothing and furniture stores, was exasperated
by banks that seemed to thwart instead of help his company's
expansion plans. Trying borrow money felt like begging, and
even when the company succeeded in getting a loan, it was
invariably expensive and too short-term. "In Mexico you can't
work with the banks," says Coppel. "Every year the bankers
start from zero in terms of reviewing your information. You
cannot count on them."
Clearly, Coppel S.A. needed to find an alternative source of
long-term financing for its strategy of buying land and
building its own stores. Last June, instead of borrowing from a
bank, the company raised long-term money in the local capital
markets at competitive rates. Bookrunners Scotiabank Inverlat
and Santander Serfin helped Coppel raise $97.6 million with a
peso-denominated bond sold to insurance companies and private
pension funds. The...
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