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Transelec keeps bond pipeline open

Jul 24, 2013

A deal from Transelec has shown the cross-border bond market remains open for investment-grade credits. Mexico and Bermuda are set to keep the pipeline going.

The opening in the DCM that started earlier this month is widening somewhat, with corporates now coming through, and more transactions on the way.

Chile's Transelec sold its first dollar-denominated bond in 12 years Tuesday. The electric transmission operator sold $300 million in 2023 bonds, upsizing from an expected $250 million. The deal follows América Móvil and Banco do Brasil in opening the markets for corporate issuers.

Government-guaranteed sales have also provided access to funds, particularly from US high-grade investors. Mexico's Aeroméxico sold $117 million in bonds guaranteed by the US Ex-Im bank, to fund an aircraft purchase.

Meanwhile, sovereigns are getting into the act as well, with Mexico expected to price Yen-denominated bonds as soon as next week, in what has become a regular visit to the so-called Samurai market.

"This transaction has various objectives. One is a [regular] presence in the Japanese market and second to issue at more attractive levels in the 3 and 5-year space," Mexico's public credit head Alejandro Díaz de León says.

Bermuda is on the road this week ahead of a dollar bond sale. If conditions are to its liking, the sovereign should sell a new bond next week. The island's government is raising funds to head off a fiscal deficit expected to be 6% of GDP.

It still remains to test access for high-yield issuers, who have not sold a non-Ex Im-guaranteed cross-border bond since May . With the August vacation period approaching, market watchers don't expect any more until September.LF



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