Corporate High-Grade Bond of the Year - Sigma Alimentos

Corporate High-Grade Bond of the Year - Sigma Alimentos

Bonds Debt Capital Markets Corporate & Sovereign Strategy Fixed Income Mexico

Mexican food processor Sigma Alimentos took a gamble last year, becoming the first Mexican issuer of 2017 to tap the cross-border bond market after the US presidential election.

“Obviously there was a lot of noise about NAFTA,” says Sigma CFO Eugenio Caballero.

But Sigma had $450 million in debt reaching maturity in 2018. “We wanted to refinance and we would rather do it sooner than later,” Caballero says. Executives argued in a European roadshow that the company’s fundamentals and ability to pay debt “would not change whether we had NAFTA or not,” Caballero says.

Sigma’s diversified business portfolio proved crucial. More than one third of its revenues come from Europe and its ownership of Spanish company Campofrío helped soothe investor worries.

The company’s transaction proved successful, raising €600 million on the back of an orderbook that was around 4.5 times oversubscribed.

Lead managers opened the books at 250 basis points to 262.5 basis points over mid-swaps, before tightening at guidance to 237.5 basis points to 250 basis points over mid-swaps. Final pricing tightened to 225 basis points over mid-swaps, at a yield of 2.684%, or a reoffer price of 99.628. Only 5% of the buyers were from outside Europe with 79% of those being fund managers.

Caballero says the company plans to continue to seek financing in dollars or euros as opposed to the local markets. “In the long-term it's a lot cheaper versus doing it in pesos,” Caballero says, citing less attractive interest rates and duration.

Sigma could consider another bond sale this year to repay debt, specifically a 3.375% 2022 note held by Campofrío. "That is another instrument we are looking at because it might make sense to pay that one off," he says. LF