Grum informed its shareholders in the Mexican Stock Exchange of the issuance of two senior unsecured notes for an amount of 500 million dollars (one) with a coupon of 5.39% and maturity in 2034 and another for an amount of 300 million dollars with a coupon of 5.76% and maturity in 2054.
The net proceeds from the placement will be used to pay the existing bank debt of grumwith maturities between 2025 and 2027, and the surplus, if any, for general corporate purposes, thus improving the company’s maturity profile.
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“The prosperous offering of the Notes was oversubscribed by 9x times. The transaction received the BBB rating on the part of S&P Global and of BBB+ on the part of Fitch Ratings”, the group explained to its shareholders.
He added that the Notes are issued pursuant to the registration exemption provided for by Rule 144A and Regulation S (Regulation S) promulgated under the United States Securities Law of 1933 (the US Securities Act of 1933), as amended (the “US Securities Act”).
Settlement of both transactions is expected to occur on December 9,2024,subject to satisfaction of common closing conditions for these types of transactions. The Notes will be governed by the laws of the State of New York and is anticipated to be listed in the Singapore Stock Exchange (SGX-ST).
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Founded in 1949, Grum is one of the largest producers of corn flour and tortillas in the world. With leading brands in most of its markets, the company has its corporate offices in San pedro Garza García, Mexicoand has around 24,700 employees and 75 plants.
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How can the oversubscription of Gruma‘s bond issuance impact future financing efforts for the company?
Interview with Finance Expert on Gruma’s Recent Bond Issuance
Editor (Time.news): Welcome, Dr. Laura Martinez, finance expert and financial market analyst. Today, we’re discussing Gruma’s recent announcement regarding its issuance of senior unsecured notes, totaling $800 million.Can you break down the importance of this move for our readers?
Dr. Martinez: Thank you for having me! Gruma’s issuance of two senior unsecured notes—$500 million with a 5.39% coupon maturing in 2034, and $300 million with a 5.76% coupon maturing in 2054—is notably strategic. It aims to refinance existing bank debt that is maturing between 2025 and 2027, which will likely improve their maturity profile. This helps the company mitigate refinancing risks associated with upcoming debts.
Editor: oversubscription by nine times is quite impressive. What does that indicate about the market’s perception of Gruma?
Dr. Martinez: Indeed, an oversubscription rate of nine times illustrates strong investor confidence in Gruma. The ratings of BBB from S&P global and BBB+ from Fitch Ratings reflect the company’s solid financial fundamentals. Investors are likely drawn to Gruma’s established market presence and its potential for growth, particularly in a staple commodity sector like corn flour and tortillas.
Editor: You mentioned the importance of improving the maturity profile. Can you explain why this is vital for companies, especially in the food industry?
dr. Martinez: Absolutely. For companies in the food industry, managing cash flows effectively is crucial to handle operational costs, supply chain dynamics, and unforeseen market fluctuations. By extending debt maturities, companies like Gruma can stabilize their financial planning, allowing more capital to be allocated towards growth initiatives rather than immediate debt repayment. This creates a buffer for investment in innovation and expansion, which is particularly important in a competitive market.
Editor: Gruma’s notes will be governed by New York laws and are anticipated to be listed on the Singapore Stock Exchange. What are the implications of this cross-border element for investors?
Dr. Martinez: Listing in different jurisdictions, like Singapore, broadens Gruma’s investor base, appealing to international institutional investors. This cross-border aspect not only enhances liquidity but also establishes Gruma as a globally recognized player in the market, which could drive further interest in future offerings. It’s a strategic move that increases openness and access to capital, important elements for growth in a globalized economy.
editor: As we approach the settlement date of December 9, 2024, what practical advice would you give to our readers who might be considering investments in such bonds?
Dr. Martinez: For potential investors, it’s vital to assess the overall stability and growth prospects of the issuing company. Investors should look at not just the coupon rates, but also the fundamental strength of Gruma, including its market position, financial health, and growth strategies.Diversification is key—don’t put all your eggs in one basket. Consider the bigger picture of your investment portfolio and remain informed about market conditions and industry trends.
Editor: Thank you, Dr. Martinez, for this insightful analysis of Gruma’s bond issuance. Your expertise will certainly help our readers navigate their investment strategies more effectively!
Dr. Martinez: Thank you for the possibility! It’s always a pleasure to discuss the dynamics of financial markets and their implications for investors.