Mexican financial institution Banorte (GFNORTEO.MX) has successfully secured $1.35 billion in international markets through the sale of hybrid debt. This substantial deal underscores a robust investor appetite for higher-yielding bank paper emanating from Latin America. Banorte, a prominent Mexican lender, provides a comprehensive suite of financial services to individuals and businesses across its home country, making it a key player in the nation’s financial landscape. The successful raise marks a significant transaction for the institution, bolstering its capital base.
The bank structured the offering into two distinct tranches of perpetual additional tier 1 (AT1) notes. The first tranche comprised $600 million with an 8.0% coupon, designed to be callable by the bank after 6.5 years. The second, larger tranche amounted to $750 million, featuring an 8.45% coupon and callable after 10 years. Financial outlet IFR reported on Friday that Banorte management pursued the issue to leverage what they described as an “opportunistic window” in the market, aiming to capitalise on favourable conditions for such instruments.
According to a roadshow presentation from the bank, as cited by IFR, this two-part structure is strategically designed to help smooth Banorte’s overall call schedule, optimising its long-term debt management strategy and capital structure. Despite the successful capital raise and the strategic rationale behind it, Banorte’s shares experienced a modest decline on Wednesday. The company’s stock closed approximately 1.5% lower after the announcement of the significant debt issue was made public.
