Background
Sigma was able to act quickly to monetize a window of opportunity in the markets before an FOMC meeting.
The transaction was the first corporate dollar-denominated investment grade transaction to hit the Latin American capital markets in 2016.
The bond was rated BBB Stable by Fitch, BBB with negative outlook by S&P Global Ratings and Baa3 Stable by Moody’s.
The proceeds from the bond sale were used to refinance Sigma’s existing bank debt, extending its average life from 3.1 to 6.4 years.
Transaction Breakdown
Sigma issued its US$1bn 10-year bond at a coupon of 4.125%, the lowest coupon for any entity within the Alfa Group. The orderbook, which was oversubscribed by 3.2x and the syndicate strategy allowed for a price compression of 37.5bp.
The marketing began on April 20 with a 3-day, 3-team global roadshow targeting high quality investors in the US and Europe.
The transaction was announced on April 25, with initial price thoughts for a US dollar-denominated benchmark sized 10-year deal coming in at the UST+262.5bp area.
Guidance was announced to the markets later that day at the UST+235bp mark. The orderbook at this point was led by US IG and EM high quality investors.
The bond was primarily bought up in the US and Europe, which accounted for 78% and 18% respectively for the transaction’s geographic distribution. 3% of the buyers for the bond came from LatAm, with 1% originating elsewhere.
By type, 75% of the bonds were taken up by asset managers, 20% was bought by pension funds and insurance companies, 3% by hedge funds and 2% of the bonds were purchased by private banks.
“The notes were widely accepted by investors around the globe, showing Sigma´s positioning as one of the largest branded refrigerated foods companies in the world with presence in Europe, Mexico, the United States and Latin America.” commented Mario Páez, CEO of Sigma Alimentos.
