Junk Telecom Bonds Crushed by Colombia Peso Swoon Stage Comeback

Mobile phone company Millicom International SA is repairing the damage it suffered in the bond market last year as the slump in Latin American currencies eases.

The company, which gets almost 90 percent of its revenue from the region despite being based in Luxembourg, has seen its $800 million of notes due in 2024 surge 21 percent this year, six times the average gain for junk-rated emerging-market debt. The return also almost wipes out the 22 percent loss in 2015.

Bondholders are regaining confidence in Millicom as currencies like Colombia’s peso stabilize and the company expands its offerings, said Cedric Rimaud, a director of emerging-markets research at Gimme Credit LLC who recommends the company’s bonds. Colombia, where the peso lost a quarter of its value last year, is the phone company’s single-biggest market, accounting for almost 30 percent of its revenue. Millicom, which operates mobile phone services through its brand Tigo in Central America, Africa, Colombia, Bolivia and Paraguay, is also offering cable TV, Internet services and mobile financial services.

“We have a positive fundamental view on Millicom, as its organic growth drivers are strong and its product offering is competitive in the market,” Rimaud said by e-mail. “Investors will recognize the value of Millicom’s portfolio and its growth prospects."

Millicom’s bonds are benefiting from the rebound in demand for emerging-market assets and moves by Moody’s Investors Service and Fitch Ratings to affirm the company’s credit grades this year, Nicolas Didio, head of investor relations at Millicom, said in an e-mail.

--With assistance from Alex Wisch To contact the reporter on this story: Eduardo Thomson in Santiago at ethomson1@bloomberg.net. To contact the editors responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net, Michael Tsang at mtsang1@bloomberg.net, Lester Pimentel, Rita Nazareth

By: Eduardo Thomson

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