Panama's Aeropuerto Internacional de Tocumen sold a complex two-part US$1.855bn financing in August that refinanced high-yield bonds into high-grade and raised money to cope with the coronavirus crisis.
The deal, which came as the pandemic slowed and airports began to show tentative signs of life, not only raised capital and lowered debt service costs, but was also structured to garner investment-grade ratings – Baa2 and BBB from Moody's and S&P. Prior to the offering, Tocumen’s bonds were rated by S&P at BB+.
A portion of the proceeds were placed in a Covid-19 recovery fund, with the bulk earmarked for operations and management, and other proceeds were used to finance a tender for Tocumen's 5.625% 2036 notes and its 6% 2048 notes.
The Covid fund would be used to help the airport cope with the ravages of the pandemic and assist in processing airline traffic at one of the region’s largest airports for international traffic.
The tender allowed the takeout of US$1.4bn of Tocumen’s outstanding two high-yield notes, which were rated two notches lower than Panama, in their entirety with a consent rate of 92.2% of the total outstanding notes. A collective action clause was used to repurchase any outstanding notes not tendered.
The transaction achieved the lowest yields and coupons for Tocumen and was the year's largest corporate issuance from Panama and Central America.
Bank of America and Citigroup were joint bookrunners, with Banco General as a joint lead arranger. The issue was oversubscribed within 45 minutes of announcement and reached peak books of US$7.4bn. Final demand saw US$2.4bn for the 20-year and US$4.7bn for the 40-year.
At pricing, the offering saw a 4% coupon for the US$555m 2041 bond and a 5.125% coupon for the US$1.3bn 2061 bond, cutting pricing by some 50bp from initial price thoughts in both tranches.
"The success of this transaction stemmed from a combination of structured finance expertise to optimise the rating outcome, liability management advice to achieve a 92% participation, and a leading platform through which we received the ideal distribution,” said Max Volkov, head of Latin America DCM at Bank of America.
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