Chile Inc Plans Cross-Border Spree

Several Chilean corporates are among cross-border bond issuers lining up for the traditional September-October LatAm issuance spree. Banco del Estado is heard having mandated Deutsche Bank and JPMorgan for a new deal, while state-owned miner Codelco is picking banks for a new benchmark-sized transaction. Others rumored to be considering issuance are pulp producer CMPC, retailer Falabella and Telefonica Moviles Chile. Issuance from the latter 2 would mark international debuts. “Liquidity available [internationally] is very strong, as are the reputations of Chilean issuers, and the [new $1bn 2020] government bond has set a nice benchmark,” Diego Torres, corporate debt analyst at Santiago-based Munita, Cruzat y Claro in Santiago, tells LatinFinance. Such conditions set issuers up for low yields, he explains. The domestic market, where depth and favorable conditions have long kept many top issuers at home, are still strong, he says. However, scale and cheaper hedging costs due to improved FX rates may push some to international markets. Falabella is one looking at both options, bankers say. “Diversity away from the Mexican and Brazilian issuers would be very good for us,” says a West Coast-based EM investor. He anticipates at least 4 issuers from Chile by the end of the year. Chemical producer SQM, Banco Santander Chile, and energy companies ENAP and Colbun have issued dollar bonds this year, raising $1.25bn.