Deals of the YEar awards
Mexican telecoms giant América Móvil decided a few years back that it wanted to unload its cellular towers to concentrate on innovating its communications network.
It created a new company in 2015 to take over nearly 12,000 towers in Mexico and in 2021 decided to do the same more than 30,000 towers in 15 countries, from Puerto Rico to Argentina.
“It was a big step,” says América Móvil CFO Carlos García Moreno. “We decided that it would be best to use our resources for technology instead of building and maintaining towers. It was a decision that allowed us to focus on innovation.”
A much bigger step came in March 2022, when the company priced an inaugural $1-billion bond linked to Sitios, a new company that it would create to take over the tower business.
“This was an excellent transaction that unfolded in a complicated environment, with Russia’s invasion of Ukraine and the Federal Reserve raising rates,” says García Moreno. “There was nothing in the market, but investors understood what we were doing.”
The bond, which wins the award for Corporate High-Grade Bond of the Year, was not what América Móvil had originally planned. According to García Moreno, the company had actually considered a syndicated loan before opting to issue paper. The final format was also different. Once the company settled on a bond, the idea was for dual-tranche format, but a two-day roadshow prompted it to scrap a 5-year placement and go with just one 10-year bond.
The bond, maturing in 2032, settled with a 5.375% coupon. Appetite was so great that it was oversubscribed 4.8 times. Citi and J.P. Morgan were global coordinators and also acted as joint-bookrunners alongside Barclays, BBVA, BofA Securities and Scotiabank.
The final result was all the more headline-grabbing because this was not simply a bond issued by América Móvil, but rather a “travel bond,” with the notes migrating to Sitios once it was incorporated by the company.
García Moreno says the company had been looking for the right legal mechanism that would allow it to transfer debt to Sitios, and the banks presented the idea of the travel bonds.
“The investors knew what we were doing, which I think this was part of the huge interest in Sitios,” says García Moreno. “Migrating the bonds to the new company and deciding on using just the 10-year instrument helped provide us with liquidity we wanted.”
Sitios was formally created in August 2022, and all the 10-year senior notes moved from América Móvil to it. The company transferred tower assets in 13 countries immediately and is working to eventually migrate those in two others, Dominican Republic and Peru. It also transferred debt to Sitios, which García Moreno notes freed up resources for the company to continue investing. LF
Global Coordinators: Citigroup; J.P. Morgan
Joint Bookrunners: Barclays; BBVA; BofA; Citi; J.P. Morgan; Scotiabank
Issuer's Legal Advisors: Bufete Robles Miaja; Cleary Gottlieb
Underwriters' Legal Advisors: Ritch Mueller; Simpson Thacher
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