Advent Unit Debt Sinks in Mexican Airport Contract Dispute

Bonds issued by an Advent International Corp. unit are posting the second-biggest selloff in emerging markets this month after the Mexico City airport said its concession expired at the end of 2013.

The $550 million in 2019 bonds of Aeropuertos Dominicanos Siglo XXI have lost 10 percent in January, the worst performance in emerging markets after Brazilian sugar producer Aralco SA-Acucar & Alcool, whose bonds have fallen 11.6 percent.

The unit of Boston-based private equity firm Advent, which draws about 40 percent of its revenue from the contract with the airport, said this month that it still holds the right to parking fees and commercial leasing. Officials in the Dominican Republic, where the company generates the rest of its revenue, are reviewing its concession there after Advent used more than 60 percent of the bond sale to pay dividends.

“Holders will need to be willing to endure a certain level of turbulence and live with the volatility as the conflicting and confusing news flow is unlikely to slow anytime soon,” JPMorgan Chase & Co. (JPM) analyst Jacob Steinfeld wrote yesterday in a research report, cutting the bonds to neutral from the equivalent of buy.

An external press agency for Advent’s Mexico airport operations declined to comment.

Yields on the airport securities fell two basis points, or 0.02 percentage point, to 12.73 percent at 2:12 p.m. in Mexico City. They have surged 319 basis points since Dec. 14, the most since the securities were issued in November 2012.

Standard & Poor’s changed the outlook on Aeropuertos Dominicanos’s credit rating to negative on Oct. 4, citing the Mexico City airport concession. The company is ranked BB- by S&P, or three levels below investment grade, and an equivalent Ba3 by Moody’s Investors Service.

To contact the reporter on this story: Veronica Navarro Espinosa in New York at vespinosa@bloomberg.net

To contact the editor responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net

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