Chilean retailer Cencosud has issued a CLP54bn ($115m) 2031, marking the first 20-year fixed-rate bond to come from a corporate in the local market, according to a banker on the deal. The bonds priced at 95.91 with a 7.00% coupon to yield 7.40% after generating over a CLP100bn in demand mostly among pension funds, insurance companies, mutual funds and private banks. Tenors on domestic fixed-rate paper issuance typically don’t stretch out beyond 10 years, with issuers using UF-denominated bonds to reach the longer points along the curve. Proceeds will be used for investment and refinancing purposes. Celfin and EuroAmerica were the bookrunners on the deal, rated AA on a national scale. Cencosud made its dollar debut in January, when it raised $750m in 2021 bonds.
Category: Chile
Sodimac to Issue Local Bonds
Sodimac, the home improvement unit of Chilean retailer Falabella, is looking to issue UF4.5m ($161m) in a dual-tranche local bond transaction. It wants to sell UF3m in 10-year notes and UF1.5m in 30-year paper. The date of the issuance has not yet been determined, according to a lead banker. Banco de Chile is managing the sale. Falabella’s mall operator, Mall Plaza, came to the market last week with a UF3.5m transaction. Falabella told LatinFinance in February that it was considering issuing around $500m in local currency bonds in Chile, Argentina, Peru and Colombia to finance its investment plans for the next 5 years. It plans to invest up to $3.5bn and open 215 stores and 16 shopping malls.
Aguas Shares Dip After $1bn Sale
Aguas Andinas stock ended lower on Wednesday after Chilean government entity Corporacion de Fomento de la Produccion (Corfo) raised $979m equivalent through the sale of shares in the water utility. The transaction represented 30% of Aguas Andinas and involved the sale of 1.83bn shares at CLP250 per share, raising CLP457.5bn ($979m). The price came at a 3.8% discount to Tuesday’s CLP260 close before the company’s shares dropped to CLP248.17 Wednesday. Demand reached CLP873.5bn with 14% of the sale going to domestic retail accounts and the remainder to domestic institutional and international buyers. The government keeps a 5 % stake in Andinas, including class B shares that allow it to retain certain veto powers in major decisions going forward. Corfo had initially planned to sell all of its 35% (2.14bn shares) position, but adjusted that amount to 30% during the period leading up to the sale. Banchile, Bank of America Merrill Lynch and IM Trust led. Andinas is 50.1% owned by the Inversiones Aguas Metropolitanas (IAM) vehicle, which is in turn 56.6% owned by Spanish water utility Agbar, which is controlled 75% by France’s GDF Suez. Privatized in 1999, Andinas provides waste and water services in Chile through six subsidiaries. The government got approval late last year for the sale in order to raise funds for use at other state-owned enterprises. It follows January’s $1bn sale of 40% of utility E.CL and is part the government’s plan to meet increased financing needs through asset sales following last year’s earthquake.
Enap Turns to Loan Market
Chilean state owned oil and gas company Enap has sent out RFPs as it seeks to raise $500m through loans with 3 and 5-year tenors, say market participants. Submission deadlines have passed, but banks expect a response as soon as next week. The company was considering 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 plus 240bp, inside of the 250bp (+/-5bp) guidance. Demand for the paper reached a healthy US$2.5bn despite a downgrade that year. BofA Merrill Lynch, BBVA, BNP and Scotia managed the bond sale.
Chile Raises Rate
Chile’s central bank raised its rate Tuesday by 25bp to 5.25%, in-line with market consensus. “Though momentum in the economy remains strong, inflation has remained well behaved and resolute central bank action has succeeded in bringing down inflation expectations; moreover, in its most recent minutes the central bank indicated some improvement in the inflation outlook,” Morgan Stanley says.
Chile Targets $1bn-Plus Aguas Block Sale
The government of Chile could raise more than $1bn today when it is scheduled to sell a 30% stake in water utility Aguas Andinas. The government’s Corporacion de Fomento de la Produccion (Corfo) is selling up to 2.14bn of shares to the public, meaning a CLP556.4bn ($1.19bn) deal at Tuesday’s CLP260 closing price. If all are sold, the government would be left with just a 5.0% piece, though this position includes class B shares that would allow it to retain certain veto powers in major decisions going forward. Books were due to close yesterday, with pricing to be announced this morning. “It’s a quasi-bond,” says an equities analyst, citing a dividend yield of more than 8% and a stable business model. Banchile, Bank of America Merrill Lynch and IM Trust are managing the sale. Andinas is 50.1% owned by the Inversiones Aguas Metropolitanas (IAM) vehicle, which is in turn 56.6% owned by Spanish water utility Agbar, which is controlled 75% by France’s GDF Suez. Suez had been heard looking to increase its stake in Andinas through the offer. Privatized in 1999, Andinas provides waste and water services in Chile through six subsidiaries. The government got approval late last year for the sale. This follows January’s $1bn sale of 40% of utility E.CL and is part the government’s plan to meet increased financing needs following last year’s earthquake.
Chile Expected to Raise Rate
Chile’s central bank is expected to raise its rate by 25bp to 5.25% today, according to market consensus. “Following three consecutive monthly 50bp rate hikes and a policy rate level that is now at 5.0%…we expect the central bank to slow the pace of rate normalization” Goldman Sachs says in a report. Morgan Stanley also predicts a 25bp hike. “Though momentum in the economy remains strong, inflation has remained well behaved and resolute central bank action has succeeded in bringing down inflation expectations; moreover, in its most recent minutes the central bank indicated some improvement in the inflation outlook,” the shop says.
Santander Ends Show
Santander Chile ended its non-deal roadshow last week with a better indication of market sentiment for a potential bond issue, but pricing levels were thought to be unsatisfactory for the financial entity to take further steps, say rival bankers and investors. The wait-and-see approach may change if market conditions improve, but the bank is not thought to be in any rush to pull the trigger. “It does not surprise me that they are not coming to market,” says a DCM syndicate official. “They are a very price-sensitive issuer and the local market offers very competitive rates making it cheaper to issue locally.” LatAm corporate issuers in the dollar market remain on the sidelines in the face of headline risk despite favorable fundamentals. Volatility from the presidential elections in Peru, negative US economic data and re-emerging European debt woes have left many issuers waiting for better timing to issue. Santander Chile, rated A3/A+/AA, was last in the dollar market in January when it issued a $500m 2016 floater via JP Morgan and Santander, pricing it at Libor plus 160bp.
Vapores Starts Equity Road Show
Chile’s Compania Sudamericana de Vapores (CSAV) has started investor meetings for a $500m share subscription open to existing holders. It plans to sell up to 834.7m shares at CLP285 each. If all shares are sold, this would raise a total of CLP237.89bn ($508m). The shipping company is offering holders 0.411325 shares for each existing share during a period expiring June 30. Chile’s Grupo Luksic, which brought its stake in CSAV to 20% in April, plans to subscribe all of its rights and will pick up any rights not subscribed by current holders, according to a report by bookrunner Celfin. Proceeds will be used to help Vapores to acquire cargo ships and for working capital. Shares closed at CLP291Monday, implying a 2.1% discount for the rights offering price.
Security Prices $200m Equity Raise
Chile’s Grupo Security has priced a CLP36.22bn ($77.5m) public follow-on, part of a CLP90.00bn ($192m) capital increase through the issuance of new shares. The financial group priced the 181.1m public shares at CLP200 each, representing a 4.3% discount to Thursday’s CLP209 close. Including the participation of existing holders, the company will issue 450m shares total. Security is raising funds for growth at its various units. The group’s main operation is Banco Security, though it also has operations in insurance, investments and asset management. IMTrust and Security’s brokerage unit managed the sale. Shares closed at CLP WHAT Friday. Chile’s equity market has been active this year, with fishery Australis Seafoods raising $71m equivalent last week, and Aguas Andinas set for a follow-on Wednesday and Cruz Blanca to IPO the following week.