The new Argentine local securities rules, which enabled a bookbuilding process to take place in the run-up to the bond placement, allowed the JLMs greater flexibility to manage the timing of the transaction.
Cablevisión and the JLMs organized a roadshow lasting 4 days, covering New York, London, Boston and Los Angeles.
During this time the company participated in over 40 investor meetings with more than 80 accounts.
Cablevisión’s bond was met with high demand, enabling the pricing on the bond to be tightened significantly to 6.5%.
Having only issued two months before, the Argentine sovereign’s popularity provided a good opportunity for other Argentine entities to look towards foreign funding.
On the back of strong investor feedback, on 8 June 8, a 5-year (non-call 3-year) US$500mn bond was announced by Cablevisión with IPTs in the high 6% area. By comparison, the sovereign’s 5-year bonds were yielding 5.80%.
Demand for the bond was high. The orderbook was 7x oversubscribed, reaching US$3.7bn. This allowed for price guidance to be set at around the 6.625% +/- 12.5bp. The transaction eventually priced at the tight end of the range at 6.50%, 40bp lower than IPTs. The yield is also the lowest of any Argentine corporate in the past 15 years.
“The transaction carried the lowest coupon for an Argentine corporate over the last 16 years. This was possible as we were first corporate issuer to come to market since sovereign’s problem with the holdout creditors was resolved,” said Marcelo Iribarne, Finance Manager at Cablevisión.
The transaction represents an almost 300bp reduction in Cablevisión’s financing costs, thanks to the ability of Argentine entities to again access international capital. Due to a lack of high quality corporate credits within Argentina, the success of the price discovery was even more notable.
The demand for the bond was widespread, with 63% of interest coming from North America, 17% from Europe and Latin America each and 3% from Asia.
The investor base was also varied: 51% of the funding was provided by asset managers, 26% by hedge funds, 10% by private banks and 5% by fund managers whilst 8% came from other lenders.
The proceeds of the bond will be used to refinance Cablevisión’s existing debt, the majority of which reaches maturity before 2018. US$400mn of the US$490mn will be refinanced, whilst the rest of the capital will be used to fund the expansion of the company’s networks, as well as the launch and development of its mobile business through Nextel, which it recently acquired.