Mexican television and radio producers have been a powerful influence behind the growing popularity of Hispanic-oriented programming. In many international markets, ratings for Mexican programming are growing, along with advertising spend and investor interest.

HSBC recognised the potential of Mexico's media industry as a global leader in the production of Spanish-language content. The key company in the industry is Mexico's Grupo Televisa, the largest media company in the Spanish-speaking world and a significant player in the international entertainment business.

Televisa is involved in television, film and radio production, broadcast, cable and pay TV networks, satellite, print and online publishing, sports and live entertainment.

"Televisa has a strong ability to produce high-quality content; something which is highly valued and exported worldwide. Among other things, the company produces soap operas and distributes them in the US, Asia, Europe and even the Middle East," said Michael Schwandt, head of HSBC Mexico Local Corporates and Infrastructure for Global Banking.

In 2007, the company sold 165m magazines and exported 60,308 hours of programming to over 60 countries.

HSBC made use of its local and global knowledge expertise to successfully execute Televisa's two landmark corporate bond transactions.

Establishing a strong position in the market

In March 2007 Televisa appointed HSBC as joint lead manager and joint bookrunner for its first 30-year corporate bond. The MXN4.5 billion issue achieved the lowest spread compared to similar euro-peso issues and attracted orders worth MXN7.5 billion.

By utilising HSBC's global network, Televisa was able to attract orders from international fund managers, pension funds, insurance companies and banks. The orders were primarily from US and Mexican investors, reflecting the Group's cross-border capital markets reach.

"There were good sources of funds for the issuers and they were able to look for cheap local funding without the currency breach," explained Federico Casas, Director of HSBC Mexico Financing Risks Solutions team.

Televisa first considered HSBC Global Banking and Markets after observing its previous experience in the bond market. "Televisa realised that we had done a good job on similar transactions," said Mr Casas.

Three months earlier, HSBC had jointly managed a 30-year MXN3 billion floating rate bond for America Movil (AMX), Latin America's largest wireless telecommunication services provider. "It was the first long-dated Mexican peso-denominated issuance by a Mexican corporation. Because of this transaction, many banks realised that there was a potential market for peso long-dated corporate issues," Mr Casas said.

Building credibility in every transaction

Following its 30-year corporate bond issue, Televisa worked again with HSBC in 2008 to offer its first 10-year benchmark transaction. HSBC was the joint bookrunner for the USD500 million offering which was four times oversubscribed and priced at a spread of 220 basis points over the benchmark 10 year US Treasury. "This underscores the relationship we have built collectively with Televisa to position ourselves as a leading debt capital markets and global markets bank," said Mr Schwandt.

Televisa's relationship with HSBC covers transaction banking, lending, derivates and updates in global markets and debt capital markets enabling the bank to provide seamless transactions.

"This was a combination of right name and right market at the right time. We had the credibility after previous transactions, and we started updating Televisa on a regular basis about market conditions and windows of opportunity," Mr Casas added.

The offering was fully subscribed in less than an hour and closed after four hours with an order book close to USD2 billion. The order book was oversubscribed mainly from more than 100 accounts from the US, Europe, Asia and Latin America subscribed. The oversubscription led Televisa to price five basis points more through the tight end of priced guidance, performing well in the secondary market.

Growth Potential

The value of media companies producing Spanish-language content has been increasing due to the growing Hispanic demographic in the United States as well as the continued rise in popularity of Latin American programmes worldwide. Televisa has laid the foundation for other media companies in Mexico to explore their potential in global markets.

With the present marketability of Spanish-language programmes, analysts see growing investment opportunities in the Latin American media market and beyond. "Televisa is well-positioned in the market. That's definitely due to its attractiveness within the investor marketplace and its ability to generate the cash necessary to finance its growth and maintain a sound financial standing," said Mr Schwandt.

Michael Schwandt, head of HSBC Mexico Local Corporates and Infrastructure for Global Banking

HSBC's global experience and local presence helps connect global investors with the Mexican media industry, maximising the contribution of companies like Televisa to Mexico's economic growth.

"The balance sheet commitment that HSBC has been able to demonstrate is something that Televisa appreciated and valued, and it's something that, at the end of the day, has been a key differentiator. When HSBC brings value to our clients, it in turn allows us access to more business and the opportunity to consolidate our relationships," said Mr Schwandt.

Led by companies like Televisa, Mexico's media industry has further growth potential in both its local and overseas markets, said Mr Schwandt. "This is a sector that is attractive for HSBC, and Televisa will always be a contender there. The quality, size and distribution of its content give it an undeniable edge."