Category: Chile

Chile’s Caja de Compensacion La Araucana is currently on the road and expects to raise some CLP40bn ($77.6m) in the local markets next week. The financial institution plans a 5-year bond. BCI is managing the sale. Arucana is rated A on a national scale. In December, it issued CLP10bn in 5-year bonds and in December 2010 raised CLP10bn in 5-year notes via Itau Chile.

Chile’s Quinenco is expected to begin marketing this week an up to UF4.65m ($201m) bond offering in the local market with a view to pricing by month’s end. The holding vehicle for the Luksic family is preparing a 7-year bond of up to UF2.3m in size with a 3.5% coupon and 2-year grace period, and a 21-year bond of up to UF2.3m with a 4% coupon and up 15-year grace period. It will use the proceeds for its investment. Banchile and BBVA are managing.

More international borrowers, as well as Chilean names with a foreign presence, are set to tap the country’s bond markets in 2012, a year that could see a surge in new issuance volumes if access to loan funding shrinks. The recent UF2m ($87m) 5-year bond sale from the Chilean unit of Dutch financial institution Rabobank is just one sign that foreigners are once again looking at the country’s domestic market, says Gonzalo Ferrer, managing director of DCM and financial structuring at Celfin Capital, a bookrunner on the trade. “[Rabobank] is a little different, not less interesting,” as it was a local entity of an international bank selling bonds in the domestic market, Ferrer says. Celfin has been touring several LatAm countries in an effort to encourage borrowers to take advantage of opportunities in Chile. However, so far the response to so-call “huaso” bonds – the name given to local bonds issued by foreign borrowers – has been lukewarm at best, even after regulators earlier this year changed rules to broaden the appeal of this sector to mid-tier names. Only two borrowers have tapped this market. Mexican telecom America Movil has completed two such trades to date, while Peruvian bank BCP added a third. A UF2.5m issue from supranational bank Bladex has not materialized. Indeed, 2011 failed to generate even one “huaso” bond, though Chile has increasingly become an essential stopover for regional borrowers seeking to sell both USD and BRL paper. Peruvian Reg-S only trades, such as Interproperties Finance Trust’s recent $185m 2023, have also seen considerable demand from Chile’s buyside. Expectations of high issuance volumes this year slowly faded after the European debt crisis, as well as domestic problems such La Polar’s default this summer, dampened enthusiasm for bond sales. Next year and late 2011 could be different, however, especially if an international credit contraction occurs, forcing would-be loan borrowers to the local bond market. At the moment Celfin has