Orbia successfully closed on the first reopening of its issuance of Sustainability-Linked Bonds for MXN 10 billion

On August 29, 2023, Orbia successfully completed the first reopening of an issuance of sustainability-linked bonds for a total of MXN 10 billion on the local market. The market response was strong, with total demand of MXN14 billion, a bid-to-cover ratio of 1.40 times. The credit ratings were AAA(mex) from Fitch Mexico and HR AAA from HR Ratings.

The deal was organized into two formats: one floating-rate (Orbia 22L) and one fixed-rate (ORBIA 22-2L), and BBVA acted as underwriter. The floating-rate format went out at a spread of 39 basis points over the 28-day TIIE—below the initial price talk of 40-45bp—with a remaining term of 2.3 years. The fixed-rate issue was placed at a spread of 150bp with a remaining term of 9.2 years. The spread was the same as the IPT and the original placement, resulting in an annual yield of 10.75%.

The bonds were taken up by a wide variety of investors, including Afores, government agencies, decentralized agencies, money desks, insurance firms, mutual funds and private bankers. The proceeds will go to refinance liabilities and for general corporate purposes, including capital investment, working capital and operating expenses.

In this issue of sustainability-linked bonds, the ORBIA 22L portion is linked to Orbia’s commitment to reduce sulfur dioxide (SOx) emissions by 44% by 2023; the ORBIA 22-2L portion is linked to a 60% reduction in SOx emissions by 2025. Both of these are measured against SOx emissions in the base year of 2018.

The transaction once again demonstrates local investors’ support for issuers that are committed to ESG practices.

BBVA thanks Orbia for its trust in inviting us to underwrite this important deal.