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CASE STUDY: América Móvil upsizes benchmark sized Euro bonds

América Móvil launched a benchmark-sized Eurobonds during a window that saw improving market sentiment, which allowed the telecoms incumbent to tighten pricing and attract strong demand from real money accounts.

Jul 19, 2016 // 11:22AM

Background

Amidst a backdrop of relative market stability and improving sentiment in Latin American credit, América Móvil sought an opportunity to hit the international capital markets for the first time since 2014.

On 7 March the company launched its benchmark-sized dual-tranche Eurobond, becoming the first Latin American issuer to tap the market in 2016.

Transaction breakdown

América Móvil’s Eurobond was split between a €850mn 8-year tranche and a €650mn 12-year tranche in order to optimise pricing.

Demand for the notes was slightly skewed in favour of the 8-year tranche, but given the lack of competitive supply the company was able to build a strong book in excess of the volumes initially intended.

The deal was launched at 8:30AM GMT, and while the book started growing slowly at first, demand began to pick up considerably around midday.

The bond was nearly twice oversubscribed, with orders split between €1.6bn in demand for the 8-year tranche and €1.1bn for the 12-year offering.

Nearly half of the 8-year tranche was allocated to accounts based in France, Germany and Austria; 14% was placed with accounts in Southern Europe; 12% with accounts in Switzerland; 9% with accounts in the UK; 8% with accounts in the Benelux region; 5% with accounts in the US; and the remainder with accounts based elsewhere.

Fund managers picked up the majority of the 8-year notes (70%), followed by insurance and pension funds (16%), banks (13%), and other retail investors (1%).

About 38% of the 12-year tranche was placed with accounts in Germany, Austria and France; 26% with accounts in the UK and Ireland; 21% with accounts in Southern Europe; 6% with accounts in Switzerland; 6% with accounts in the Benelux region; and 3% with accounts based elsewhere.

Fund managers picked up 64% of the 12-year notes, insurance and pension funds 28%, 6% banks, and 2% other retail investors.

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