Deals of the YEar awards
2022 was a tough year for global markets – and Latin America was not immune.
Russia’s war against Ukraine combined with the effects of an unprecedented pandemic-era stimulus and a system awash with liquidity to stoke runaway inflation globally – and an aggressive series of interest rate hikes to combat rising prices had the effect of dampening investor appetite for risk assets across the board.
The result for Latin America and the Caribbean was a steep drop in external bond issuance. The U.N. Economic Commission for Latin America and the Caribbean reported that $58.5 billion in international bonds were placed in the first 10 months of 2022, down 58% from the same period the previous year, with an average coupon almost 1.5% higher.
One company stood out for having bucked the trend: Mexican telecoms giant América Móvil.
The company went to the market several times, including with an inaugural bond for its new spinoff, Sitios. Its efforts, including in bringing groundbreaking transactions to market in the most challenging conditions, won it the award for Corporate Issuer of the Year.
“In a very difficult year, we were able to raise $4 billion in three separate transactions,” says América Móvil CFO Carlos García Moreno. “This says something about us and our investors.”
América Móvil began the year with a $1 billion inaugural 10-year bond for Sitios, a company purpose-built to take over its telecom towers business in the region. The bond, issued in March, had a coupon of 5.375%.
It was not only an inaugural placement, but a “travel bond,” which meant that investors acquired América Móvil paper knowing that it would eventually migrate to a new entity. Sitios was formally established in August 2022, receiving assets, including more than 30,000 towers in 13 countries – towers in two other countries still need to move – and debt.
The Sitios bond was oversubscribed nearly 5 times and attracted more than 150 orders and 16 investors with tickets at least $50 million, according to BofA Securities, one of the bookrunners on the deal alongside Barclays, BBVA, Citi, J.P. Morgan and Scotiabank.
This was followed in July by a $750 million bond with a 10-year maturity and a 4.7% coupon. It was oversubscribed 2.7 times.
The company was back in the market toward the end of the year, this time in Mexican pesos. Like the “travel bond,” this issuance made history as América Móvil’s first sustainability-linked bond. The 24 billion peso placement ($1.25 billion) was done on the Mexican Stock Exchange (BMV). The BMV reported that it was the largest offering to date in labeled bonds, which include blue, green, social, sustainable and transition bonds.
The company earmarked 21.7 billion pesos from the bond for environmental and social projects. García Moreno says that the resources will be used for renewable energy sources and energy efficiency equipment with the goal of reducing the company’s emissions footprint by 50% as of 2030, as well as to boost digital inclusion.
“The bond proceeds will be used to provide internet access in marginalized communities, and promote the use of information technology so that these communities can take advantage of connectivity,” he says. LF