LatinFinance - July 2013 - 33

from reusable bottles, derives directly
from the company’s experience in its
home markets. Philippine consumers buy
around 70% of soft drinks in refillable
bottles – a low cost form of selling the
product. KOF expects the proportion of
single-use bottles – which are recyclable
without being refillable – to increase in
the Philippines, as it has in Latin America.
“If the Philippines ends up being
similar to what Mexico was, or Colombia
or Brazil were 20 or 30 years ago, I think
we’re in for a very good surprise in terms
of profitability of the business going
forward,” says Treviño.

KOF will focus on its new Asian
business before it considers bidding on
other regional operations, Treviño says.
In the meantime, the company is open
to buying operators closer to home,
in particular in Mexico or Brazil. “We
already have management, back offices,
technology in these countries, and the
processing and systems in place to be
able to acquire a neighboring franchise
territory,” he says.

Currency flexibility

KOF is keeping its funding options open.
It financed its Philippine purchase with

a bridge loan, which was subsequently
taken out in May with a 7.5 billion
peso ($603 million) 10-year bond. It
considered issuing in Philippine pesos
and US dollars instead – but ultimately,
Mexican pesos proved the cheapest option,
costing around 2.79% in dollar-equivalent
terms.
The company will consider issuing in
other local markets, depending on the
nature of the investment and funding
costs. “If we were to have a Brazilian
acquisition in the future, it would
certainly make sense to look at the BRL
market,” Treviño says. LF

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Brazilian corporate with the best capital markets strategy

Odebrecht

________________________________________________________________________________________________________________

Odebrecht has demonstrated its agility across the capital markets, slashing its
funding costs along the way

large and familiar borrower in the
its agility in the debt market, printing a
debt capital markets, Odebrecht still
jumbo transaction in dollars and reais to
has a knack for impressing with smoothly fund another buyback.
executed trades. One such stand-out came
It’s a tactic that Odebrecht will
in June 2012, when the construction firm
raised $1 billion in 10-year and 30-year
paper.
Investors lapped up the long bonds.
The paper quickly rallied from the 7.25%
reoffer yield, encouraging the builder
to tap them soon after. It added $450
million of 30 year debt at a 5.95% yield in
October. Odebrecht used the proceeds of
the reopening to buy back an equivalent
amount of eight-year and 11-year notes
yielding 7% and 6%, respectively.
A number of companies were in
contention for Brazilian corporate with
the best capital markets strategy, with
many having demonstrated exemplary
use of the debt, equity and M&A markets.
But Odebrecht took the honors for its deft
liability management, which allowed it to
take advantage of low funding costs.
The company has also underscored
Odebrecht: managing liabilities

continue to consider, especially in light
of its plan to keep gross debt at 2.5
times Ebitda. Nevertheless, Construtora
Norberto Odebrecht’s CFO Jayme
Fonseca acknowledges that the attractive
rate environment that has made liability
management appealing may be coming
to an end.
“Whenever we have an opportunity to
issue less expensive and longer debt, we
will aim to access the market again,” he
says. “You never know, yields are so low.
But we do not expect to have yields lower

©REUTERS

Building trust

July 2013

LatinFinance 33

LatinFinance - July 2013

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