(Bloomberg) -- Bonds of Mexican billionaire Ricardo Salinas Pliego’s cable and internet provider Total Play Telecomunicaciones jumped on Wednesday after the company launched an offer to swap $600 million of unsecured bonds due in 2028 for secured notes.
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The notes, which had been the best performing emerging-market credit in 2024, rose 11 cents to 88.50 cents on the dollar.
The offer, which is backed by holders of more than 50% of the existing 6.375% notes, is conditioned on the subscription of an additional $270 million in cash for the new 11.125% bonds due in 2032, Total Play said in a Tuesday statement. The new amortizing bonds, which are set to be listed in Singapore, are secured by both cash flow and its fiber optics network, the company said.
The 2028 notes surged nearly 28 cents on the dollar to 76.75 cents in the fourth quarter, generating a total return of 107% for the year, according to a Bloomberg index.
Total Play bonds rallied on expectations of the swap and other signs of improving liquidity, said Oren Barack, managing director of fixed income at New York-based Alliance Global Partners.
“If they pull this swap off, it would improve their debt profile and we could probably see another ratings upgrade this year,” Barack said. “They are a name to watch with cautious optimism.”
Investors backing the swap include Cerberus Capital Management LP, Aviva Investors Global Services Ltd., Amundi Asset Management U.S. Inc. as well as Afore Azteca, the Mexican pension fund controlled by Salinas’ Grupo Elektra, the company said.
The rally in Total Play bonds comes amid a collapse in the share price of Grupo Elektra, wiping some $5 billion off Salinas’ wealth and pushing him to delist the stock.
Total Play bonds sank into distressed territory in 2023 as investors panicked over the company’s liquidity as well as Salinas’ tactics as he battled bondholders over defaulted debt from his broadcaster TV Azteca.
However, Total Play allayed investor concerns in recent months following another debt swap last year and a rollover of peso debt into longer-term notes in October. Moody’s Ratings upgraded Total Play’s credit rating in late November and Fitch Ratings followed with a similar move in December, with both firms citing improving liquidity.