Airport Risks Send Advent Unit’s Yields to Record HighVeronica Navarro Espinosa
Yields on bonds sold by Advent International Corp.’s Latin American airport unit rose for the first time in four months in October as the company’s Mexico concession expires and its Dominican Republic operations face scrutiny from lawmakers.
The yield on $550 million in 2019 bonds issued by Aeropuertos Dominicanos Siglo XXI rose 0.81 percentage point in October to 9.51 percent as the average yield on emerging-market corporate debt fell 0.2 percentage point, according to data compiled by Bloomberg. Yields on the airport bonds touched a record 9.91 percent last week after trading as low as 7.59 percent in April.
The company’s leasing agreement with Mexico City’s airport, which accounts for 40 percent of revenue, expires Dec. 31. With no accord reached on an extension, Standard & Poor’s put its BB-rating on creditwatch negative Oct. 4. Meanwhile, senators in the Dominican Republic, which generates the balance of the company’s revenue, are investigating the sale of the bonds in November 2012 after Advent used more than 60 percent of the proceeds to pay itself a dividend.
“They might lose their contract in Mexico,” Omar Zeolla, a corporate credit analyst at Oppenheimer & Co., said in an interview in New York. “On top of that you have all the noise coming from the Dominican Republic.”
The Dominican Senate opened an investigation on Sept. 4 to determine if Advent’s $550 million bond sale could have a “negative” impact on the airport concessions, Senator Carlos Castillo said via e-mail. Aerodom, as the company is known, has a 30-year concession to operate six airports in the Caribbean country, including in the capital of Santo Domingo.