Deutsche Bank resells $60 mn Transtelco debt to Korean credit cooperative

Deutsche Bank has resold $60 million in senior secured debt of Transtelco Inc., a fiber optic services provider in the US and Mexico, to MG Korean Federation of Community Credit Cooperatives.

The debt is part of $125 million in senior notes that Deutsche Bank extended to Transtelco, collateralized by fiber optic networks and frequency licenses. It is expected to generate an average IRR of 6% or above, the Financial News, a South Korea news outlet, reported on Oct. 23.

Sources with knowledge of the matter confirmed the report.

With the debt investment, the credit cooperative became the first South Korean institution investing in a Mexican telecommunications service provider as the $45 billion credit cooperative is seeking to diversify portfolios into overseas infrastructure and other alternative assets.

The penetration rate of fiber optic cable in the US and Mexico at the lower end of the 10% range, compared with over 70% in South Korea and Japan, suggests fiber optic networks have more room to grow in the Americas, the Maeil Business Newspaper added.

The resale came after Transtelco announced in June that it had raised an unspecified amount of new debt capital from Deutsche Bank to refinance debt and use the remainder for capital expenditures.

In 2013, it had borrowed high-rate loans to finance the acquisition of Dallas-based telecommunications service operator XC Networks Ltd.

Transtelco owns and operates fiber networks along the southern US and Mexico with more than 11,000 km of fiber optic cable.

The credit cooperative bought the five-year debt through South Korea-based private equity firm Lindeman Asia Investment Co. Ltd.

By Daehun Kim

daepun@hankyung.com