Category: Chile

Chile’s Corpbanca is looking to close this month a $150m 2-year loan which may be upsized depending on demand, say bankers. Pricing is on a ratings grid, out of the box at 95bp for BBB+. For an A minus rating, the spread falls to 87.5bp, rising to 112.5bp for BBB, 137.5bp on BBB minus, say bankers. “The spread is a little tight, but they are paying nice fees,” says a banker, who sees a 75bp fee for the biggest ticket as attractive. The average life is roughly 1.75 years and there may be room to grow towards $200m. With BNP, Citi, Commerzbank, Standard Chartered and Wachovia already apparently on board, the deal is understood to be seeking only minor retail participation. European banks are heard not participating owing to a sharp recent rise in their cost of funds, while Asian institutions are said to be plugging the gap.

Chile plans to issue up to $3bn domestically in the second half of the year, according to local and wire reports citing remarks by finance minister Felipe Larrain. It sold $3bn in the first half, through regular domestic auctions of 5, 10, 20, and 30-year bonds. The sovereign is also planning its first international issue since 2004, with a $500m debut peso-denominated global issue and a $1bn 10-year dollar bond in the works. Citi, JPMorgan and HSBC are heard having won the international mandate.

Chilean hotel company Enjoy has issued UF3m ($120m) in local bonds in 2 tranches. A 2015 UF1m piece priced at 100.21 with a 4.00% coupon to yield 3.94% and a 2024 piece for UF2m priced at 101.28 with a 4.75% coupon to yield 4.59%. The issuer says it will use proceeds to pay down debt. IM Trust led the issue.

Chile state owned lender Bancoestado plans to issue UF3m ($118m) in 28-year bonds June 30. It had previously notified the market it would issue the bonds today, but later changed the date, without explaining why. Calls to the bank were not returned. The bond is denominated in inflation-linked UF units and will carry a 4.5% coupon. Local ratings are AA+/AA and the deal will be self-led. The bank has been absent from the local market since December, when it priced a UF5m 3.6-year deal at 98.99 to yield 3.40%, or 60bp over the sovereign.

Chile’s opposition-led senate has voted 17 to 15 against increasing taxes on miners. The ruling party has proposed increasing taxes from the current 4% to as much as 9%, depending on companies’ sales margins. With the increase, it expected to raise as much as $700m a year to fund post-quake reconstruction efforts, for which it estimates it will invest a total of $8.4bn over 4 years.

Gilding Chile’s first World Cup soccer match win in 48 years (1-0 versus Honduras), Moody’s upgraded the sovereign to Aa3 from A1. The agency cites the country’s economic resilience after February’s earthquake, as well as the government’s strong fiscal position and favorable debt profile. International reserves and fiscal savings are almost $40bn, compared with about $12bn total government debt, Moody’s says, adding that the average debt-to-GDP ratio for Aa rated sovereigns was 36% last year, but only 6% for Chile. Similarly, Chile’s debt-to-revenue ratio of 25% compares favorably with the Aa median of 88%. Moody’s also upgraded to Aa3 from A1 the ratings of Banco Santander Chile, Banco de Chile, Banco Estado and Banco Estado’s New York branch.

Chile has filed a $3bn debt program with the SEC, according to regulatory documents. The highest-rated LatAm sovereign made clear in April its plans to hit the bond markets for $1.5bn this year to help with a budget shortfall stemming from post-earthquake reconstruction. Chile did not indicate any lead banks in the filing, though is heard to have awarded the job to Citi and JPMorgan, according to DCM bankers. A formal RFP was circulated last month. The sovereign is planning to issue $500m through a debut peso-denominated global issue, as well as $1bn in 10-year dollar-denominated bonds. Though it had been expected to be able to come to the market as soon as this month, the sovereign is expected to sit out the downturn in global markets. An issue would be the issuer’s first dollar sale since 2004. Chile’s finance minister has said he plans to make more regular use of the bond markets going forward. Chile was upgraded Wednesday to Aa3 from A1 by Moody’s.

Chile’s central bank tightened the monetary policy rate by 50bp to 1.00%, saying that the immediate effects of the earthquake dissipated quickly and the economy continued to recuperate. Given the strong economic activity figure combined with the increase in inflation after months of deflationary readings, Bulltick had moved its expectations for the start of the tightening process with a rate hike of 25bp in June rather than holding until July. Morgan Stanley also believed Chile’s central bank was likely to start its policy normalization process this month with a 25bp hike after keeping its target rate at a record-low level of 0.50% since July of last year as growth quickly rebounded after March’s brief earthquake-linked dip.

Chile’s Corpbanca is understood to be in New York today holding bank meetings on a $150m 2-year, 2-tranche loan, say bankers. With BNP, Citi, Commerzbank, Standard Chartered and Wachovia already apparently on board, the deal is understood to be seeking only minor retail participation.

S&P has upgraded the ratings of Chilean sugar producer Iansa to B minus from CCC+. The outlook is positive. S&P cites the company’s improved financial flexibility and operating performance during the past 2 years and its successful $51m equity increase. “The positive outlook reflects our expectation that we could raise Iansa’s ratings if the company further strengthens its financial flexibility in 2010 and 2011. A reduction in debt position to near $100m by year-end 2010 coupled with a sound cash position would be consistent with the expected credit strengthening,” S&P says. Meanwhile, S&P has changed the outlook on the BBB minus ratings of Mexican household appliance company Controladora Mabe to stable from negative to reflect its improved financial performance and debt reduction and the agency’s expectation that this trend will continue. “In 1Q10, Mabe showed improvement in its sales volumes, trend that we expect to continue throughout the rest of the year, supported by positive growth prospects in Mexico and other key countries within the region, and consolidation of its Brazilian operations,” S&P says.