América Móvil’s Claro to issue nearly US$300mn in debentures for Brazil investments

América Móvil’s Claro Brasil plans to issue 1.5bn reais (US$290mn) in debentures, debt instruments that come with income tax breaks for private investors.

The company informed Brazil’s securities and exchange commission (CVM) that its representatives will meet with potential investors during a roadshow. This will be Claro's 13th debentures issuance. 

The debt can only be sold to professional investors and the book building process will take place until January 24, the company said. The debt settlement is expected to take place on January 27, while the bonds will start trading on January 30. The fiduciary agent responsible for Claro's debentures issuance is Pentagono Distribuidora de Títulos e Valores Mobiliários.

The company did not detail the purpose of the resources to be raised, but debentures are usually used for investments in infrastructure and network expansion.

In 2022, Claro bought part of Oi's mobile operation for 3.5bn reais, alongside TIM and Telefônica Brasil. It also disbursed 1.7bn reais for spectrum at the 5G auction in November 2021. That year, it had already issued 1.5bn reais in debentures.

By the end of September, Claro had a total debt of 10bn reais, of which 8.3bn reais in debentures.

Debentures have become a popular funding source among telcos after a regulation in 2020 authorized carriers to use them. The government has approved around 20bn reais in funding for telecom investments since 2020, mostly in the form of these instruments.

Of the total funding outlined by the ministry, 18.5bn reais came from debenture issues, with another 1.2bn reais from the telecoms technology development fund (Funttel).