Feb 6, 2023
Slim’s America Movil Eyes Strong Mexican Peso in Debt Sale Plans
(Bloomberg) -- Billionaire Carlos Slim’s telecommunications giant America Movil SAB is planning to sell global bonds denominated in Mexican pesos, a bet the currency will continue to gain as North American companies move supply chains closer to home.
Latin America’s largest mobile service provider may tap markets in the first half of the year and use the proceeds for liability management, said Chief Financial Officer Carlos Garcia Moreno in an interview. The notes would be simultaneously listed in Europe, the US and Mexico.
It will be the company’s first sale in about seven years of peso-denominated bonds on global markets, which Garcia Moreno said is a move to take advantage of strong investor demand for the currency. That’s likely to continue as companies from across North America set up operations in Mexico as part of the nearshoring trend and economic integration in the region continues.
“Demand for funding in pesos is going to climb and there will be more foreign investors willing to lend to you — partly because of the economic integration between Mexico, the US and Canada, partly because of nearshoring,” he said. “This economic integration that’s been brewing has made the currency stronger. There’s a lot of new demand for funding in the long-term peso market.”
The currency rallied more than 9% versus the US dollar since the start of last year, the best among major peers tracked by Bloomberg after the Brazilian real. High interest rates and little volatility explain the peso’s resilience. Wall Street has attributed some of those gains to nearshoring — with firms including Bank of America and Barclays seeing evidence of the global shift.
The company is wagering the debt, likely to be longer tenors, will also prove attractive as central banks enter easing cycles. “Investors want duration to bet on falling interest rates. They will find a great opportunity to bet on that because interest-rate cuts will be more impactful in Mexico,” he said.
Foreign investors have been piling on long-term debt sold by the Mexican government as inflation eases, drawing in buyers looking to profit from interest-rate cuts. Foreigners are buying long-dated Mbonos, as they are known, at the fastest pace since before Covid, according to Claudia Ceja, a strategist at BBVA in Mexico City.
America Movil meets all the Mexican regulatory requirements to sell long-term debt, Garcia Moreno said. S&P Global Ratings and Fitch Ratings assign the company an investment-grade score.
The company last tapped the global market in July, issuing $750 million of 10-year bonds, which currently yield around 4.86%, according to data compiled by Bloomberg. It stopped selling global notes in pesos during a period of deleveraging and due to changes from the market, Garcia Moreno said.
“Now it has turned again, so we’ll have a great period to do these bond sales,” he said.
--With assistance from Michael O'Boyle.
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