Category: Chile

Banco de Credito del Peru (BCP) is targeting November 3 for a sale of debt to Chilean investors, the second bond to be placed by a foreign company in that domestic market. BCP’s “huaso” issue, as they are known, is set to be an approximately $100m equivalent 2014, according to a banker managing the sale, denominated in either pesos or the UF inflation-linked unit. The UF notes are set to pay a 3.5% coupon, while the peso issue is expected to pay 6.5%. A combination is an option, the banker explains, through the aim would be to issue in one unit or the other, to simplify the process of swapping to dollars. A 3-day roadshow was set to finish today. The deal comes from a $300m equivalent shelf. LarrainVial and BCI are managing the sale. America Movil opened the huaso market in April, pricing UF4m ($145m) in 3.00% coupon 5-year bonds to yield 3.31%, versus a 3.50% target, after drawing demand of around UF6.4m. Citi was the underwriter on the deal, which the issuer says equated to roughly 4.5% in dollars, cheap at the time. The deal took close to 3 years of work with local authorities and investors, and paves the way for more similar trades, which offer domestic accounts diversification. The ideal candidate for this type of deal is an investment grade corporate that is a leader in its sector, say bankers. Having business in Chile helps, but is not a requirement. Bankers are heard pitching several potential issuers in Mexico, Peru, Colombia and Brazil.

Fitch says that Wal-Mart’s expressed interest in unconditionally helping out Chilean retailer D&S with its outstanding public debt and a portion of its bank facilities is a positive for the credit quality of these instruments, and could lead to a ratings upgraded. D&S, whose IDR is rated BBB and has an AA minus rating locally, is on watch evolving. D&S’ has said that it will take a 3Q non-cash charge of approximately $180m and that it would breach covenant contained in approximately $616m of debt agreements. Wal-Mart’s additional explicit support of D&S provides further evidence of commitment to its newly acquired operation as well as the desire to implement more conservative accounting practices, which should benefit the retail operations and D&S over the medium-term, Fitch says. It adds that on a stand-alone basis, D&S’ credit quality has been under pressure due to the company’s rapid new store growth and its private label credit card business, which have pushed leverage metrics to high levels for the rating category. D&S’ debt ratings absent Wal-Mart’s support would likely be lower than current levels, Fitch says.

In line with market consensus, Chile’s central bank has left its monetary policy rate unchanged at 0.5% as domestic demand and activity expand while unemployment and credit conditions remain stable. The central bank also says it intends to keep the rate at this level for “a prolonged period.” Standard Chartered, whose prediction was in line with consensus, believes Chile will be among the first in the region to raise rates once the economy shows growth again, but says there will not be any changes before year-end at the earliest. Bulltick, which also agreed with consensus, the central bank to keep the benchmark policy rate at 0.5% through year-end 2009.

Chilean pulp and paper maker Empresas CMPC plans to issue $500m in new shares and another $500m in dollar bonds to help finance the $1.43bn purchase of the Guaiba unit from Brazil’s Aracruz, it says. It has hired JPMorgan, Santander and BNP to manage the bond sale, according to a company official. A deal should take place by mid-November. The sale of 20m new shares, at approximately $25 each, is set to begin in the second half of November, the company says. The remaining $430m will come from the company’s own cash. CMPC agreed last week to buy the unit in southern Brazil, which would make CMPC the world’s second-biggest pulp producer.

Spain’s Iberdrola has sold its 95% stake Chilean hydropower unit Iberoamericana de Energia Ibener to Chile’s Compania General de Electricidad, it says, for $281.6m. An additional sale, of a 55% stake in Empresa Electrica Lican to CGE for $16m did not go through because of “external causes,” it says. Ibener operates the 75MW Peuchen and 49MW Mampil dams in Chile.

Xstrata has agreed to sell Barrick Gold its 70% stake in the El Morro copper and gold project in Chile for $465m. The transaction is expected to close by January 30, and will allow Xstrata to direct resources toward “other priority development projects,” it says. Barrick says it plans to pay cash for the asset. New Gold owns the remaining 30% of El Morro, located in the in Chile’s Atacama Region. Xstrata’s copper maintains a presence in Chile through its Lomas Bayas copper mine, Altonorte Metallurgical Complex, 44% interest in the Collahuasi joint venture and the Energia Austral hydroelectric project.

Scotiabank Sud Americano, Scotia’s Chilean unit, has issued UF4m ($154m) in 2017 bonds to pay down long-term debt. The single-tranche bonds have a coupon of 3.20% and a yield of 2.89%. The bonds are rated AA+ by Fitch. Scotia’s own banking arm led.

Chile-based Cia. General de Electricidad says it plans to issue 20m shares, which based on a closing price of CLP3,350 per share, would be worth $125m. Meanwhile, subsidiary CGE Transmision issued on Wednesday UF3.5m ($135m) in bonds to pay down debt and finance investment projects. The 2020 bonds have an annual interest rate of 4.3%. Banchile led the offering.

Chile-based Corp Group Banking has closed a $100m private placement of 7.5% notes due 2014. The Reg S deal through Celfin was offered and sold outside the US. Corp Group Banking is a privately-owned Chilean company with a 50.86% ownership interest in CorpBanca, a commercial bank listed in Chile which has ADRs on NYSE. Dechert acted as US counsel to the issuer.

Scotiabank Sud Americano is planning to sell UF4m ($153m) in 2017 bonds on the Chilean domestic market. The inflation-linked notes will have a coupon of 3.2% and pay a yield to be set during the sale, scheduled for September 24. Scotia’s own brokerage will manage the sale, rated AA+/AA- on a national scale.