Mexican media giant Televisa eyes new peso bond deal

Thu May 2, 2013 3:04pm EDT

May 2 (IFR) - Mexican media giant Televisa began meeting US investors this week to pitch its first international bond in four years, offering a peso-denominated deal aimed at both the domestic and foreign markets.

The largest media company in the Spanish-speaking world, Group Televisa is pitching a Ps6.5 billion (US$536m) 30-year bond this time round, unlike its last dollar offering in 2009.

The company is hoping to get both local and international accounts interested in the deal, which is being led by Citigroup, Deutsche Bank, HSBC and Morgan Stanley.

Bankers have long been trying to tempt Televisa - which has a stake in US Spanish-language network Univision - to come back to market, but the company has insisted on a deal in pesos.

"A lot of bankers have been pitching them, but they only wanted to see peso-denominated debt," one debt capital markets banker told IFR.

"They have been looking to do a peso-denominated deal for many years."

Televisa came to market in 2007 with a euro-peso deal aimed at the foreign market, selling a Ps4.5bn 30-year that priced at par to yield 8.49% - or 67 basis points (bp) over Mexican domestic government bonds.

Those bonds are now trading at around 6.50%.

NOT EASY TO DO

Latin American issuers of debt often have difficulties coming up with a deal that is large and liquid enough to appeal to local and international accounts alike.

In fact, it wasn't until last year that wireless giant America Movil helped create the regulatory framework that allowed its bonds to trade both in Mexico and abroad.

This helped pave the way for Televisa. But even so, the bona fide blue-chip, a Spanish-language media powerhouse with Baa1/BBB+/BBB+ credit ratings, is sill expected to have to pay a so-called "liquidity premium" - that is, pay more in interest - to lure investors into buying the new bonds.

At around just US$500m in size - and with the long 30-year maturity - the new issue will not be as readily liquid as investors would like.

And the deal will be less liquid than December's issue from America Movil, which returns to the market almost quarterly to top up liquidity.

"If they are going to do a one-off trade, the bigger question is, aside from the (tenor), how much are they going to pay for illiquidity?" one banker said.

He said that the America Movil deal, at just a 10-year maturity, was "very much the sweet spot for investors" as well as being appealing to local pension funds.

Issuing at the longer 30-year maturity could cost Televisa an estimated additional 80 basis points (bp) in interest, or coupon, over the cost of a 10-year bond, bankers and analysts said.

This is derived from the fact that there is an 85bp differential in spread between government bonds, known as Mbonos, maturing in 2022 (4.50%) and 2042 (5.35%).

Televisa last came to the local market to issue debt in October 2010 - and that was the first time in a decade.

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