Latin American telecoms giant Amйrica Mуvil (NYSE: AMX) may use much of the proceeds from its US$4bn bond issue on Wednesday (Mar 24) for debt payments, analysts say.

The Mexico-based company’s sale was the biggest emerging-market dollar bond sale this year and the company’s second international debt issue this month.

“They’re taking advantage of the enormous liquidity there is in capital markets and prepaying debt that is due to expire this year and for Telmex and Telmex Internacional over the coming years – that’s the way we’re seeing it,” Moody’s analyst Nymia Almeida told BNamericas.

According to the analyst, Amйrica Mуvil does not need cash to finance its takeover bid of its two above-mentioned sister companies.

She pointed out that the acquisition of shares in Telmex Internacional (NYSE: TII) (Telint) is going to be through either cash or equity exchange and it is not clear yet how cash will be needed or what the final share price will be.

If Amйrica Mуvil had to pay 100% cash for the Telint shares, Moody’s estimates it would cost some US$5bn and the company generates some US$15bn in cash flow. Then one has to add to that, the cash generated by Telmex (NYSE: TMX).

Sergio Rodrнguez, head analyst for Latin America with Fitch Ratings, told BNamericas that while the company has said that some of the proceeds could be used for debt payments, US$4bn would pay off almost half of the company’s debt, which would be unusual.

He believes that the company is taking advantage of the market conditions and may use the proceeds for an acquisition, although it is not immediately apparent what assets the company may be interested in.

Amйrica Mуvil has expressed interest in acquiring a license in Costa Rica, however investment there would be spread out over a period of time and the company would have little trouble financing it.

“Part of the company’s strategy has always been to make opportunistic acquisitions. On the debt side, its strategy has also been to try to make opportunistic bond placements, taking advantage of the market conditions and then seeing how they use it to manage their capital structure,” Rodrнguez said.

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