Chile’s Aguas Andinas has raised UF1.65m ($73m) in the local bond market, with proceeds going to finance investment. The water utility priced a 20.5-year UF-denominated bullet bond at 101.05 with a 4.0% coupon to yield 3.92%. Banchile-Citi and Corpbanca led the issue, which has a rating of AA+ on a national scale.
Category: Chile
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Chile Lowers Rates, Peru Holds
Chile’s central bank has decided to lower the country’s benchmark interest rate by 25bp to 5.00%, despite expectations it would hold. In its statement accompanying the decision, it cites continued slow growth in developed markets and slowing in key emerging markets. Meanwhile, Peru held its rate at 4.25%, as expected, with its central bank mentioning slow global growth and an increase in inflation as the main factors influencing its decision.
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Aguas Andinas Set for Local Bond
Chilean water utility Aguas Andinas plans today to raise up to UF1.650m ($72m) in the local bond market, using proceeds to finance investment. The water utility can choose between a 10-year inflation-linked UF-denominated bullet with a coupon of 3.7% and a 20.5-year UF bullet with a coupon of 4.0%. Banchile-Citi and Corpbanca are leading the issue, which has a rating of AA+ on a national scale. Meanwhile, private medical group Empresas Red Salud is on the road with Celfin and IMTrust for a possible bond issue this month, as is BancoEstado, which is expected to price next week. It is managing its own sale.
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Mexican Homebuilder Could Lead Huaso Expansion
Mexico’s Corporacion GEO has filed a $100m-equivalent bond shelf in Chile, in a signal that regulatory changes could be working to attract new and more varied foreign issuers into the country’s so-called Huaso market. “We are undertaking this process to open windows to access financing,” Roberto Torres, the homebuilder’s head of capital markets, tells LatinFinance. The credit line registration is for a 10-year UF-denominated bond, with Santander as bookrunner. In Mexico, GEO is unable to issue such lengthy maturities and this has led it to seek out other markets for longer tenors and more attractive funding costs. Though GEO is not yet planning a specific transaction, it sees opportunities available in the Chilean market, and if necessary, could use proceeds from a sale to refinance debt. An issue would be swapped back into MXP. “We are confident that this process [the swap] is simple and accessible,” Torres says. GEO has one BBB Chilean national scale rating, and expects a second. Its rating is BB minus on an international scale. Geo would like longer-term debt, as short-term debt represents 29.1% of its MXP12.7bn total debt. Only 3 Huaso bonds have been issued in Chile – 2 from Mexico’s America Movil and one from Peru’s BCP, but with a reduction in regulatory restrictions last year, it is hoped that more foreign borrowers will be able to feed the country’s growing institutional appetite.
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Entel Watches GTD Buy Flounder
Chile’s Entel attempts to create the country’s second largest telecom operator fell through this week after GTD Grupo Teleductos, through its parent, rejected its advances. GTD simply said that its controlling shareholder, Inmobiliaria e Inversiones El Coigue, had decided not to proceed with Entel’s acquisition offer. For its part, Entel attributes the failure of the deal to “the unilateral retraction of Juan Manuel Casanueva Prendez, representative and head of GTD.” Company officials at Entel and GTD could not immediately be reached for additional details. In late November, Entel offered to purchase GTD in exchange for a 9.8% stake in the Chilean telecom operator, but Chilean antitrust regulator Fiscalia Nacional Economica (FNE) recently placed acquisition under review, arguing that it could produce a company with excessive market power in certain service segments. The FNE said the new company must divest its 50MHz spectrum, and maintain several GTD products for at least two years. Entel has a $4.46bn market capitalization, with a free float of some 236,523,695 shares. In 2010, the company generated Ebitda of around CLP67.5bn on the back of some CLP150bn ($285.8m) in revenues. The deal sought to create the country’s second largest telecom operator, competing with Claro, a unit of Mexico’s America Movil, and Movistar, owned by Spain’s Telefonica.
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Chilean DCM Hopes for Sub-A Expansion
Chile could see more domestic bond issuance from companies rated below A on a national scale, following a recent UF2m ($87m) placement from BB+/BBB Chilean retailer AD Retail. According to leads IMTrust, the sale is the first for a local corporate issuer with a BB+ national scale rating “It’s a good sign that the market is open to these kinds of grades,” Francisco Del Rio, deputy CFO for the company, tells LatinFinance. “That is very important because in Chile the bond market is very liquid for investment-grade issuance,” he says. Due to regulatory limits, pension funds and insurance companies cannot venture too far down the credit spectrum, but there is growing group of investors, such as family offices, which are willing and able to do so. AD Retail is seen as proof of this. The 9.5-year bond, AD’s first in the local market, priced at par with a 6.05% coupon, and comes after a lengthy delay thanks to the fallout from troubles at retailer La Polar. AD had hoped to sell bonds in the public markets last March, but opted instead to arrange a short-term private placement among investors who paid the same interest rate. IMTrust also arranged this initial deal, which involved a number of life insurance companies, banks and family offices, encouraging investors to participate in the recent bond. “It’s a good sign that the market is open to these kinds of grades,” Del Rio says. Post-issuance, the paper has seen some trading in the secondary market, showing a market exists for these kinds of instruments, Del Rio adds. AD specializes in consumer electronics and home decorative products, under the ABCDIN name.
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Gildemeister Returns for Retap
Chile’s Automotores Gildemeister emerged Monday with a $100m retap of its existing 8.25% 2021 bonds, becoming the region’s first high-yield name to issue in the cross-border bond market this year. Books eventually grew to $450m on a deal that took the total outstanding size of the 2021 issue to $400m from $300m. The Ba1/BB rated auto distributor reopened the bonds at 102.267 to yield 7.90%, in line with 8% area price guidance following earlier 8.125% whispers. The scarcity value of Chilean high-yield paper attracted investors despite providing little new issue premium. “This is a good credit and represented a good opportunity to get involved,” says a participating New York-based EM portfolio manager who estimated a maximum 10bp concession. According to a bookrunner, the transaction was thought to give investors a 3bp concession based on a 102.500 price, or 7.87% yield, prior to announcement. “In short, Gildemeister got done with a minimal reopening concession at 7.90%,” notes a DCM banker away from the deal. The bond traded at 102.25 Monday afternoon in the grey, according to an investor. Proceeds from the issuance are mainly to be used to refinance existing debt. The auto distributor sold its original debut 8.250% 2021 NC5 bonds in May of last year, getting more than $1bn in orders, and pricing at par to yield inside of initial 8.375%-8.500% guidance. JPMorgan was sole bookrunner on the original debut and on Monday’s retap.
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Santander Chile Launches Loan
Santander Chile launched a $100m 2-year syndicated loan Monday via Mizuho, Goldman Sachs and Standard Chartered. The loan comes with a spread of 130bp over Libor and upfront fees of 40bp for commitments over $5m. Proceeds will be used to refinance an 18-month facility that was closed in the summer of 2010.
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La Araucana Eyes Q1 Financing
Chile’s Caja de Compensacion La Araucana is now looking to raise funds in the first quarter after delaying a local bond transaction late last year due to market turbulence, says a person familiar with the deal. The borrower is expected to tap either this month, or wait until March when the summer holidays are over in the Southern Hemisphere. In December, La Araucana had been meeting investors to pitch a CLP40bn ($78.3m) 5-year bond via BCI. La Araucana is rated A on a national scale.
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Red Salud to Start Local Roadshows
Chilean private medical group Empresas Red Salud is expected to start a roadshow this week via Celfin and IM Trust as it looks to raise up to UF2m ($87.3m) in the local bond markets, says a person with knowledge of the process. Proceeds are to be used for refinancing and investing. In June 2011, Red Salud had sought to issue an up to UF2m dual-tranche bond comprising 10 and 30-year tenors, but the borrower decided to wait for better market conditions, the person says.