Debt Restructuring: Rites of spring

Jun 28, 2013

Mexican auto parts manufacturer SanLuis has learned the hard way that life after default is not so easy

By Mariana Santibáñez

Last September, Mexico City-based auto parts manufacturer SanLuis Rassini saw an opportunity to try its luck.

Appetite for high yield bonds was strong. And market conditions seemed ripe for a return to the international bond markets.

The company had enough cash on hand to refinance its bank debt, but low rates in the bond markets tipped the balance in favor of a high-yield issue. The borrower began marketing the Ba3/B/B+ rated 10 non-call five-year bond, targeting a deal size of $200 million to $250 million.

But during the marketing process, bookrunners Bank of America Merrill Lynch and JPMorgan came across what would turn out to be an overwhelming investor concern. The manufacturer’s subsidiary SanLuis Co-Inter (SISA) had defaulted in 2010 and the failure to pay was its second in less than a decade. Investors wanted answers on how SanLuis would navigate the auto industry’s next cyclical...

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