Bloomberg reported recently that Carlos
Slim's America Movil SAB has eclipsed Coca-Cola Femsa SAB in the Mexican credit
market. The shift comes as many international investors have turned to Slim's
company as Europe's debt crisis deepens and yields on American Movil 2020
dollar bonds have tumbled to 3.77% over the last month,which is just 4 basis
points above similar debt that is being sold by Coca-Cola Femsa.
Since September of this year,the yield
differential has narrowed as investors have continued buying American Movil
bonds,which are nicely positioned to weather the global economic downturn.
Both Coca-Cola Femsa and American Movil have a Standard & Poor's A- rating,
but Bloomberg reported that the Latin American wireless carrier may be
outperforming the competition due to investor confidence in the abilities of
Carlos Slim,who is the world's richest man.
“Carlos Slim has obviously shown that
he has made the right investments,” said Alejandro Hernandez,who is a manager
of more than $1.5 billion at Interaciones Casa de Bolsa SA in Mexico City.
“Everything he touches turns to gold.”
According to the report,American Movil
bonds now yield just nine basis points less than debt offered by the Mexican
government that will also mature in 2020,as compared to a previous difference
of 35 basis points in early September. Also of note,the company's A- rating is
actually two levels above the government's.
American Movil is also considered to be
a safer bet that Coca-Cola Femsa in the bond market because of the bottler's
increased debt levels,which result from Coke's fairly aggressive acquisitions
strategy. In fact,the company is expected to make up around 50% if Mexico's
sales of Coca-Cola after it completed steps to purchase the Latin American
bottling operations of Grupo Cimsa,which is its second purchase in the last