Quinenco has approved a CLP225bn ($446m) capital increase, through an equity rights offering. The Chilean conglomerate controlling holdings of the Luksic family is raising funds for its participation in the capitalization of shipping company Compania Sud Americana de Vapores and other projects. Earlier this month Vapores announced a $1.2bn capital raise, with Quinenco contributing $1bn to help turn around the struggling shipper.
Category: Chile
Posted inDaily Brief
Mexico’s Explores MILA Partnership
Mexico’s stock exchange is interested in exploring operational partnerships with the Peruvian, Chilean and Colombian bourses making up the Mercado Integrado Latinamericano (MILA). The Bolsa says no agreement has been made yet, but there are possibilities for investments or a strategic alliance. Executives from the Lima and Bogota exchanges have said that tie-ups with Mexico and Panama would be a logical next step for MILA. These types of expansions and the improvement of the existing cross-listing platforms are top priorities in the next five years.
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Swedes Finish with 98% of Chile’s CTI
Swedish home appliances maker Electrolux has reached 97.79% ownership in Chile’s Compania Tecno Industrial (CTI), following the close of a tag-along offer. Electolux bought 64% of its Chilean peer in August for $691.5m equivalent from Sigdo Koppers, and has now spent an additional $570m equivalent. It offered investors the same CLP34.87 ($0.07) per share for remaining CTI shares and CLP325 per share for CTI’s listed Somela unit. CTI is to be consolidated into Electrolux this month.
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Volcan Heard Mandating on Bond
Peru’s Volcan Compania Minera is heard awarding a mandate for a potential international bond transaction as it looks to raise $300m. An official announcement has yet to be made, but JPMorgan and Morgan Stanley are thought to be top contenders for the business. A 10-year bond in the international markets is a likely option, though the mining company hasn’t ruled out a domestic issue, says a person with knowledge about the situation. The borrower engages in extraction, concentration, treatment and commercialization of polymetallic ores such as zinc, lead, and silver. Proceeds would be used to finance energy projects. This would be the miner’s debut in the cross-border bond market, though it did take out a $200m syndicated loan in 2008. At the time it secured a 3-year loan at Libor+140bp via leads BBVA. Other banks participating included JP Morgan, Credit Suisse, Barclays, Deutsche Bank, Societe Generale and UBS. At the time it was thought that banks were participating in the loan with the hope of getting DCM business as well.
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Chile Holds Rates, Mexico Next
Chile’s central bank chose to maintain the benchmark interest rate at 5.25%, in line with the market’s expectations. In a statement, the bank cited slowing global growth, and says that volatility could be worse than expected, with implications for Chilean growth, inflation and monetary policy. In a recent poll taken by the central bank, most analysts said they expect a cut to 5.0% by the end of the year. Mexico is scheduled to make its interest rate decision today. At its last meeting, Banxico held the benchmark rate at 4.5%, through many, such as Morgan Stanley see the door open for a 25bp cut by the end of the year.
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Embonor Seeks Local DCM Return
Chilean bottler Coca Cola Embonor is preparing a return to the domestic bond markets as it looks to raise UF4m ($175m) for investments and debt refinancing. It has registered lines for tenors of up to 10 and 30 years, with further details expected once timing is set. LarrainVial is lead. Chile’s market has remained open throughout the recent global difficulties, and more bond sales are on the horizon. Retailer Hites is eyeing an up to UF5m bond, while food products company Agrosuper wants to raise between UF1m-UF2m.
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Santander Chile Suffers from Parental Downgrade
Fitch has cut Banco Santander Chile’s credit rating to A+ from AA minus, following the recent downgrade of its Spanish parent. The agency explains that credit risk for many large and currently highly rated banks face greater downside pressure due to factors including below-trend economic growth, ongoing sovereign risks, additional bank regulation, smaller returns, and political pressure to reduce or eliminate implicit state support. The outlook is negative. Similarly S&P lowered the outlook on Santander Chile’s A+ credit rating to negative from positive, following its own recent downgrade of the parent. S&P considers the 75% owned Chilean subsidiary to be especially important.
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Banco de Chile Heads to Mexican DCM
Banco de Chile has filed a shelf to issue up to MXP 10bn ($752m) of debt in the local Mexican market. Banco de Chile will be the third Chilean issuer to tap the Mexican domestic market following similar moves by Banco de Credito e Inversiones (BCI) and Chilean miner Molymet. “Chilean issuers are turning to the Mexican market because it is attractive and offers an alternative for issuers to finance themselves,” says a banker managing the sale. Banamex and JPMorgan are leads. Timing and tenor have yet to be determined.
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Chile Seen Holding Rates
Chile’s central bank is expected to hold interest rates steady at 5.25% at its meeting today, though analysts see cuts on the horizon. The bank’s own poll of local analysts called for a pause today and cuts to 5.0% by December and to 4.5% by this time next year. Nomura, calling for a pause today, sees a benchmark rate of 4.75% in 6 months time and 4.50% in a year.
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Codelco Borrows from Offtaker for M&A
Taking the unusual step of turning to an offtaker for financing rather than banks, Codelco has agreed to a standby bridge loan of up to $6.75bn from Japan’s Mitsui and Co., to help fund the Chilean state-owned miner’s possible purchase of up to 49% of the Anglo Sur mining complex. Codelco has an option to buy the position in the Chilean complex, owned by Anglo American, and this can be exercised beginning in January. Codelco says it values the stake at $9.76bn. Once the loan is disbursed, the credit would have a tenor of up to 12 months. If not repaid with cash or 50% of Codelco’s Anglo Sur equity interest at the end of the 12 months, the debt would automatically be converted into a 5-year term loan. Company officials did not respond to requests to comment on the interest rate. The option to acquire the 49% stake had previously been held by fellow Chilean state mining company Empresa Nacional de La Minera, which sold it to Codelco for $175m. The option comes up every 3 years and expires in 2027. The bridge financing arrangement comes as Codelco and Mitsui announce an offtake agreement for 30,000 tons of copper per year subject to market based pricing terms. Anglo Sur includes the Los Bronces and El Soldado mines, the Chagres smelter and the Los Sulfatos and San Enrique Monolito prospects.