Títulos de Crédito Extranjero, 2012
América Móvil’s global 15 billion Mexican peso ($1.2 billion) bond in November 2012 introduced a new structure, drawing domestic and foreign investors into local currency notes. The structure mimics the seamless capability of the Mexican sovereign’s bonds to create liquid benchmarks with both local and global buyers without the need for separate bonds or global depository notes. One issuer, one curve. Many local-currency sales have pushed envelopes in the international area in terms of size and tenor in the last 15 years. However, this innovation could change the game for the growing class of blue chip LatAm borrowers accessing global pools of liquidity. The 2022 senior unsecured bond, known as Títulos de Crédito Extranjeros, are Securities and Exchange Commission (SEC) and Comisión Nacional Bancaria y de Valores (CNBV) registered, denominated and settled in pesos. They trade on a fungible basis in the international markets and Mexico.
The títulos attracted more than 50 billion pesos in demand, with 80% coming from foreign investors and 20% from LatAm, largely allocated to Mexico accounts.
The dual-registration was important: registering the bonds only in Mexico would have stopped some international investors buying such bonds, while selling them in the US, even in pesos, would have left many Mexican investors unable to buy or trade the bonds, says Carlos García Moreno, the telco’s chief financial officer.
“The banking commission in Mexico basically changed their requirement such that if we already had certain securities listed, say in the US, the very same securities could be listed in Mexico,” he says.
Already the structure has found followers: Mexico’s Televisa used the format for its own issue in May. América Móvil, meanwhile, expects to reinstate quarterly re-openings of the títulos after skipping the second quarter of 2013.
“The notion is to reopen the títulos every quarter which was meant to give investors a sense of liquidity, but with broad moves in rates the last thing investors want to hear about is new supply,” says García Moreno. LF