LatinFinance - January/February 2014 - 46

pesos, so it made sense to structure a
transaction in the currency even though
such an instrument had not been sold
under a 144A/RegS format before.
"RCO is not a common blue chip
company like Televisa or América Móvil, so
for us, issuing in pesos long term was very
successful," Jorge Parra, the firm's chief
financial officer told LatinFinance. "It's a
project bond, one of the hardest things to
sell to investors."
After meeting investors in the US and
Latin America and explaining its story,
RCO was confident there would be
sufficient demand to pull off such a deal.
One noteworthy aspect of the project
is its minimal construction risk: a small
extension to the 750 kilometers of road
which had been, in operation for more
than 15 years.
The deal's execution confirmed the
company's hopes. BBVA Bancomer,
Goldman Sachs, HSBC, Morgan Stanley
and Santander took orders from 55
accounts for almost twice the ultimate
MXN7.5 billion ($603 million) deal size.
They priced the 15-year senior secured
bond to yield 9%.
A striking feature of the deal was its
secondary market performance. On a
spread basis, the bond was 48 basis points
tighter a week after execution, according
to one lead manager. LF

STRUCTURED FINANCING    

SYNDICATED LOAN

RCO MXN7.5bn
project bond

Itaú BBA $1.5bn
term loan

Project bonds and local
currency debt have each
drawn growing appetite
from investors. But to combine the two deal types was
unprecedented in Mexico

Itaú BBA opened the way
for other Latin American
banks to tap international
lenders for funding the
largest loan transaction
ever made to a LatAm
institution

Infrastructure financing is no longer a game
just for bank lenders. Increasingly, bond
investors have been showing an interest in
such risk.
Red de Carreteras de Occidente, a
network of Mexican toll roads, picked up on
that trend when it needed to raise cash in
early 2013.
The company's revenues are in Mexican

46 LATINFINANCE.COM - January/February 2014

Latin America's syndicated loan market
regained much of its lost momentum in
2013. Lenders from Asia, the Middle East
and Latin America itself have filled the
space left by European institutions.
Itaú's investment banking arm made
full use of the favorable conditions to raise
a $1.5 billion senior unsecured term loan

Source: Flicker Marcelo Alves

market backdrop. Banorte had hoped to
raise $3 billion. However, as its share price
dipped 11.5% between the announcement
to pricing, so it lowered its capital raising
target.
Nonetheless, demand for the new shares
outstripped supply by 3.5 times, allowing
the bank to issue more stock. It raised
$2.55 billion at a discount of less than 1%,
and became the country's largest equity
sale since Santander Mexico listed. Bank of
America Merrill Lynch and Morgan Stanley
were global coordinators on the equity
deal. Banorte-Ixe was local coordinator.
Banamex, Bank of Tokyo Mitsubishi-UFJ,
BBVA Bancomer, BNP Paribas, BTG Pactual,
Goldman Sachs, Itaú, JPMorgan, and
Nomura were joint bookrunners.
Banorte repaid the bridge loan in August.
For its part, BBVA continued with an
organized sale process, exiting pensions
in Chile, Colombia, Ecuador and Peru
between December 2012 and April 2013. It
raised $5.2 billion from the LatAm pension
sales, on top of the $490 million it earned
in July from selling its Panama banking
operations.
Completing the divestitures allows BBVA
to focus on its remaining banking and
insurance operations in LatAm, according
to Goldman Sachs. The Spanish group still
keeps several strong assets in the region,
most notably BBVA Bancomer in Mexico. LF

STRETCHING OUT: Itaú BBA raised
double its target size when it closed
a syndicated loan

- twice the size it had been targeting and
opening links to a new suite of relationship
banks.
"There has been a good appetite in the
loan market, and we saw at the beginning of
the year very good appetite for our name,"
says Marcelo Rosenhek, funding director at
Itaú BBA.
Announcing the deal in April, Itaú
targeted $750 million - a sum larger than
anything lent to a Latin American bank
in recent years. The borrower, however,
reckoned the loan could be increased to
as much as $1 billion from 20 to 25 banks,
Rosenhek says.
Ultimately, demand was even stronger.
Itaú had been the first Brazilian to borrow
from Taiwanese banks three years earlier,
meaning it had a ready lending base there.
A representative office in Shanghai also
helped the appetite from Asia. Roadshow
meetings in London also allowed the bank
to capture European, Asian and Middle
Eastern institutions.
In the end, lenders offered more than
twice the bank's $750 million target. The
deal brought in 35 banks by the June
signing from 14 countries including Abu
Dhabi, China, Finland, Germany, India,
Japan, Kuwait, the Philippines, Taiwan,
and the US. "It was above our expectations
in terms of the volume and diversity of
the counterparties," Rosenhek says. "The
number of banks and the diversity of those
that participated in the deal was a very good
surprise."
The loan was split into a $1.23 billion
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