Debt Restructuring: Rites of spring
Mexican auto parts manufacturer SanLuis has learned the hard way that life after default is not so easy
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
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
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