CAF Returns for Tight Retap

Corporacion Andina de Fomento (CAF) has emerged with a $407m retap of its 2022 bond, seeing total demand of $1.23bn and clinching a tight price. The Aa3/A+/A+ regional development bank reopened the 4.375% coupon bonds at 107.907 to yield 3.412%, or UST+160bp, at the tight end of 165bp-area (+/-5bp) guidance that followed earlier 170bp price thoughts. Investors looking at the deal report that frequent issuer gave up very little in the trade. “We like the strong credit, but we did not like the [lack of] premium to the existing 2022s. They have to give us a little something,” says a portfolio manager following the sale who saw the 2022 bond trading at T+170bp. An official at the issuer notes a concession “flat to slightly inside” secondary levels. Repeating a common theme in DCM deals this year, investors say the issuer is able to achieve such a stingy pricing level due to the amount of excess cash they have to be put to work. Proceeds from the issuance are mainly to be used for budgetary purposes. Deutsche Bank, Goldman Sachs and HSBC managed the transaction. The sale brings the total outstanding size to $1.5bn. The notes were originally sold in June at a UST+282.5bp yield, part of a $600m cash sale that came along side an offer to holders to exchange CAF’s 2019 bonds for the 2022s. CAF also took advantage of a rating upgrade last month to raise CHF300m ($313m) in the Swiss market. CAF officials said at the time of the Swiss trade that the lender continues to analyze the USD, EUR, GBP and JPY markets, and does not rule out another CHF transaction before the end of the year. Elsewhere in the DCM, Colombia’s Coltel is scheduled to end a roadshow today, and BTG Pactual is meeting accounts through tomorrow, ahead of what is expected to be a 10-year Tier 2 sale.