Chilean bank BCI has filed a program to sell up to UF10m ($420m) in domestic bonds. The 5 and 10-year notes would both have a coupon of 2.6%. An official at the bank says it has not been determined when a sale could take place. BCI will self-lead the deal, rated AA+ on a national scale.
Category: Chile
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Santiago Metro Defines Terms
Empresa de Transporte de Pasajeros Metro, Santiago’s subway operator, plans to sell up to UF5.2m ($218m) in domestic bonds as soon as the end of this week, following investors meetings. The 2032 pays a coupon of 3.75% and proceeds are destined for debt repayment. Santander is managing the sale, rated AA/AA minus on a national scale. The exact timing will depend on market conditions and regulatory approval, a banker on the deal says.
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Uruguay’s Monte del Plata Secures $1bn Plus
Uruguayan pulp mill project Montes del Plata, a joint-venture between Stora Enso and Arauco, has raised $1.354bn in the loan market. The financing package consists of a $900m 12-year ECA tranche, a $200m 12-year B loan from the IDB and a $254m commercial B loan. ECAs included Finnish export credit agency (FEC), and Sweden’s SEK. The new pulp mill at Punta Pereira is being financed through equity and loans, and is expected to be up and running by the first quarter of 2013.
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Vapores Cut to B Minus
S&P has lowered the rating of Chilean shipping and cargo services provider Compania Sud Americana de Vapores to B minus from B. “The rating action follows CSAV’s very weak performance in 1H 2011 and the potential for continuing bad results and cash drains in the next 2 to 3 quarters,” S&P says. These developments have caused Vapores to report negative Ebitda cash flow from operations, resulting in a discretionary cash shortfall of $675m in 1H2011. Vapores is implementing a major turnaround process aimed at reducing the business scale and improving profitability, but the effects of this will not be visible until year-end 2011 or 1Q2012, the agency says. In the meantime, the controlling Claro and Luksic families have committed $350m in credit lines and underwritten $1.1bn of a future $1.2bn capital increase.
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ENAP Seeks Tight Margin on New Loan
ENAP is seeking to pay L+80bp on a $300m 5-year loan, but many are wondering how much interest the Chilean state-owned oil company will lure at that level given the rising cost of funding at banks. “Considering that Deutsche Bank issued 2-year (debt) at around L+100bp, you wonder how many banks will be signing up for this,” says one DCM official. Indeed, higher funding costs mean that some institutions would take a loss at these levels, though banks with access to cheaper domestic markets may be able to justify such margins. “We need at least 100bp for dollar funding,” adds a loan banker. Future bond business may be an incentive, and the company’s quasi-sovereign status should bring some comfort, but on a standalone basis the credit isn’t particularly healthy, say bankers. “They have high leverage. Everyone expects the government to step in if need be, but there are no explicit guarantees,” says the loan banker. Leads Bank of Tokyo Mitsubishi, BBVA, HSBC and JP Morgan are offering MLA, arranger and manger tickets of $50m, $30m and $20m, with upfront fees 45bp, 30bp and 20bp, respectively. Commitments are due October 21.
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Esval Appoints CEO
Chilean water utility Esval has named Rodrigo Azocar as CEO beginning Monday. He replaces Francisco Ottone, who was CEO on an interim basis following the departure of Gustavo Gonzalez in January. Azocaar left as CEO of oil producer ENAP in July, where he had been for 2 years, and was replaced by Ricardo Cruzat.
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HSBC Sells Chile Retail Bank to Itau
HSBC has reached an agreement to sell its Chilean retail business to Itau Unibanco. The value of the deal was not disclosed, though Itau is set to gain about $20m in assets and 4,000 clients. HSBC decided to pull out of Chile’s retail business less than a year after entering the market as part of global downsizing. HSBC will maintain its investment and commercial banking operations in Chile. Itau first started operations in Chile in 2006, when it bought the assets of BankBoston. The deal still must be approved by regulators, and should be completed by the end of the year.
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Banco de Chile Holdco Targets Bond
LQ Inversiones Financieras (LQIF), the holding vehicle for the Quinenco conglomerate’s 50% stake in Banco de Chile, is planning a domestic bond sale of up to UF5m ($215m) next week. The issuer is targeting the middle of next week for the deal offering 2033 bonds paying a coupon of 3.5%. The LQIF notes are rated AA+ on a national scale, and come with a 10.75-year grace period. Banchile-Citi and Bice are managing the deal.
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Santiago Metro Meets Buyside
Empresa de Transporte de Pasajeros Metro, Santiago’s subway operator, is meeting investors ahead of a likely deal at the end of next week or the early part of the week starting October 10. The exact timing and makeup of the sale will depend on conditions and timely regulatory approval, a banker on the deal says. The issuer is authorized to sell up to UF6.7m ($288m) in bonds with tenors of up to 30 years, and is said to be looking toward the longer end of that range in order to match its current debt refinancing needs. Santander is managing the sale, rated AA/AA minus on a national scale.
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ENAP Seeks Loan Funding
ENAP plans to hold bank meetings Thursday for a $300m 5-year loan via Bank of Tokyo Mitsubishi, BBVA, HSBC and JP Morgan, says a banker away from the trade. Pricing details have yet to be unveiled. Earlier in the year, the Chilean state-owned oil company sent out RFPs to raise $500m in the loan market via either 3 or 5-year tenors, but bankers hadn’t discounted the possibility of a 10-year USD bond or perhaps a 5-year local loan. Given the state of the market, it is hardly surprising that the borrower is seeking a smaller size at this stage and focusing on core relationship banks. The company had been eyeing the loan market as early as last year, but opted instead to issue a US$500m 10-year bond which was priced in August at 99.593 with a 5.250% coupon to yield 5.300%, or UST+240bp, inside of the 250bp (+/-5bp) guidance. Demand for the paper reached a healthy US$2.5bn despite a downgrade that year. BAML, BBVA, BNP and Scotia managed the bond sale.