Oct. 25 (Bloomberg) -- America Movil SAB, the wireless carrier controlled by billionaire Carlos Slim, is becoming the biggest Mexican issuer of debt overseas as it borrows in Europe to help finance acquisitions.
America Movil’s euro- and pound-denominated bond sales yesterday pushed the amount it has raised in international markets this year to $5.4 billion, surpassing the $3.5 billion from state-owned oil producer Petroleos Mexicanos. America Movil sold 1 billion euros ($1.4 billion) of bonds due in 2019 to yield 4.27 percent, or 11 basis points below the average for debt sold by companies globally that share the wireless carrier’s A rating, Bank of America Corp.’s indexes show.
Mexico City-based America Movil has tapped debt markets in the U.S., Switzerland, Japan and the U.K. since August to help finance a $6.5 billion acquisition of shares it doesn’t own in its former parent company, Telefonos de Mexico SAB. The purchase of Telmex, as the nation’s largest fixed-line carrier is known, is part of America Movil’s bid to offer Internet and phone services to compete with Grupo Televisa SA in Latin America’s second-biggest economy.
“We can expect America Movil to be a consistent issuer in the market due to the current strategy,” Joe Kogan, a credit analyst at Scotia Capital, said in a telephone interview in New York. “Purchasing Telmex is a more immediate reason for debt issuance.”
America Movil also sold 500 million pounds of 15-year bonds to yield 217 basis points, or 2.17 percentage points, above the benchmark British government bond yesterday. The company’s dollar notes due in 2020 yield 3.75 percent, or five basis points more than similar-maturity Mexican government debt, according to data compiled by Bloomberg.
The company is rated A- by Standard Poor’s, the fourth- lowest investment grade and two steps higher than Mexico.
America Movil’s bond sale will help pay back credit lines for about $1 billion used to help finance the Telmex acquisition, according to Chief Financial Officer Carlos Garcia- Moreno.
“We’ve always been concerned about liquidity,” Garcia- Moreno said in a telephone interview in Mexico City. “It’s always better to have cash at hand. The responsibility of the business is to try to sell when it sees a good window. It was a perfect window, very calm.”
America Movil isn’t looking to issue more debt in dollars or euros this year, Garcia-Moreno said. It would consider selling bonds in other currencies if the right opportunity presented itself to fund either the Telmex transaction or help build up the company’s cash, Garcia-Moreno said.
America Movil became the first non-financial private company in Latin America to sell bonds denominated in Japanese yen last week. It issued 6.9 billion yen ($90 million) of 1.23 percent three-year bonds and 5.1 billion yen of 1.53 percent five-year notes.
A lack of foreign acquisition targets may prompt the company to scale back debt issuance, said Fitch Ratings analyst Sergio Rodriguez.
“The number of companies to acquire outside Mexico is limited,” Rodriguez said in a telephone interview from Monterrey, Mexico. “It has an important presence in a lot of countries. In the U.S. or Canada, where it would make sense to expand to complete its geographical presence in the Americas, it hasn’t signaled any significant operation.”
The extra yield investors demand to own Mexican government dollar bonds instead of U.S. Treasuries narrowed six basis points to 221 at 7:23 a.m. in Mexico City, according to JPMorgan.
The peso rose 0.1 percent to 13.3524.
The cost to protect Mexican debt against non-payment for five years fell three basis points yesterday to 154, according to data provider CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market. Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent if a government or company fails to adhere to its debt agreements.
Yields on futures contracts for the 28-day TIIE interbank rate due in December were unchanged yesterday at 4.7 percent.
Slim, who was named the world’s richest man for a second year in a row by Forbes magazine in March, acquired Telmex in a 1990 government sale and assembled a collection of phone networks throughout the region to create America Movil. The company now accounts for about 63 percent of his $62 billion in publicly disclosed holdings, according to Bloomberg data.
Chilean Peso Bond
Grupo Carso SAB, a holding company of Slim, agreed to pay 6.79 billion pesos ($507.6 million) for the one-third of Carso Infraestructura y Construccion SAB it doesn’t already own as the unit expands into the energy business, according to a filing after the close of trading yesterday.
America Movil sold $2 billion of five-year bonds to yield 2.55 percent in August and $750 million more of its securities due 2040 to yield 5.50 percent.
The company’s offerings last year included $4 billion in dollar bonds, a $3 billion sale in the euro and pound bond markets, $1.2 billion in Mexican peso bonds and $215 million in Swiss franc notes. It issued $198 million in Chilean peso bonds in 2009.
“They can raise money relatively inexpensively,” Scotia’s Kogan said. “They have a leading place in an industry where it’s good to be the leading competitor.”
--With assistance from Jose Enrique Arrioja in Mexico City. Editors: Lester Pimentel, David Papadopoulos
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