Wednesday, 14 January 2009

Coca-Cola Femsa to Sell 2 Billion Mexican Pesos of Bonds

Coca-Cola Femsa SAB, the world's second largest bottler of Coca Cola drinks, is preparing to offer up to 2 billion pesos of ten-year notes in Mexico's debt markets. These type of sales usually come in different tranches. The notes could be either bear floating- or fixed-rate interest. The purpose of the sale is to add up pesos to existing cash holdings and repay maturing obligations. There are currently no details upon the timing and structure of a sale.

We will try to write more about the local debt market in Mexico as we develop this blog better. The situation for Mexican issuers became rather difficult a few months ago, after derivatives losses at some large companies such as Vitro shook confidence in the system, and the impact of the U.S. recession translated into tighter financing conditions for Mexican companies. On the other hand, liquidity in the commercial paper and mortgage-backed bond markets dried up in the wake of the crisis that followed the demise of Lehman Brothers Inc.

The Femsa securities are rated mxAAA by Standard and Poor's. The Mexico City-based company has a foreign currency rating of BBB+, (investment grade ranking) under the same agency.

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