Axtel Bonds Rally as Phone Carrier Sweetens Debt Exchange Terms

Axtel SAB bonds rose, pushing yields to the lowest in two months, after Mexico’s second-largest land-line phone carrier improved the terms of a debt exchange offer.

The securities maturing in 2019 gained 7.07 cents to 61.07 cents on the dollar at 12:53 p.m. in Mexico City. The yields dropped 2.95 percentage points to 19.72 percent, the lowest on a closing basis since Oct. 25, according to data compiled by Bloomberg. Axtel’s shares rose 3.3 percent to 3.18 pesos.

The Mexican phone company, which is struggling to compete with Carlos Slim’s America Movil SAB, boosted the value of an offer announced Dec. 26 to exchange dollar senior unsecured debt due in 2017 and 2019 for a combination of senior secured securities, peso-denominated convertible bonds and cash. Axtel extended the deadline to Jan. 18.

The improved terms of the debt swap came after a group of bondholders controlling at least 40 percent of Axtel’s dollar notes rejected the offer in a Jan. 9 letter obtained by Bloomberg News. BCP Securities LLC valued the new proposal at 62 cents on the dollar, compared with 54 cents previously.

The company is in the process of selling tower assets to American Tower Corp. for $250 million in a transaction that depends on the debt exchange’s acceptance.

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