Category: Chile

Chilean retailer Falabella plans to sell CLP31.4bn ($56m) in 5.3% 2015 bonds today. The peso-denominated placement follows the sale two weeks ago of $228m equivalent in 2015 and 2033 inflation-linked bonds. Banchile and Larrain Vial are managing the sale, rated AA on a national scale. Next week, Falabella’s Mall Plaza unit is expected to sell up to UF5m ($186m) in inflation-linked bonds.

Chilean fertilizer and chemical producer SQM has sold $147m equivalent in 5-year bonds on the domestic market. It priced UF1.5m ($54m) in 3.00% inflation-indexed bonds at 97.07 to yield 3.67% and CLP52bn ($93m) in 5.50% peso-denominated notes at 97.40 to yield 6.14%. Proceeds from the transaction, rated AA minus on a national scale, will be used to refinance debt. IM Trust and Larrain Vial managed the sale. SQM has been an active participant in Chilean DCM this year as it refinances debt. It also sold $173m equivalent in 5 and 21-year peso and UF-denominated bonds in January.

Grupo Saieh subsidiary Inversiones Conca and investment firm Inversiones Bujorico have agreed to acquire a 20% stake, or 387.21m common shares, in Chilean retailer Ripley for $168.75m. The deal is for CLP250 per share in cash. The stake was bought from Inversiones R, which is owned by Marcelo Calderon, formerly one of Ripley’s major shareholders. Ripley has been selling its older shopping centers in Chile to invest in new malls that generate more profit, says Celfin Capital equity analyst Barbara Angerstein. The company also plans to invest in retail concepts and credit cards, which it considers core businesses, she adds.

Chile has cut the policy rate by another 50bp to 1.25%, more than the 25bp that was expected, and it does not rule out that cutting the policy rate again might be needed. “We expect the easing cycle to end with a policy rate at at most 1.0% by 3Q2009,” says Goldman Sachs. Elsewhere, Peru’s central bank continued its aggressive easing and cut the reference rate by another 100bp to 4.00%, in line with expectations.

Chile’s Enap is heard to be close to issuing an RFP for a new loan, say syndications officials. The quasi-sovereign oil producer is understood to be seeking up to $500m to address short-term maturities. The maximum tenor for Chilean borrowers today is 3 years, say bankers. The liquidity premium rises significantly for longer tenors, they note, and Chilean borrowers are unlikely to accept market rates for such funds. Chilean state run miner Codelco is also in talks with bankers to raise up to $400m at 3 years. Enap was downgraded in December to A3 after a poor year, and will thus face a higher margin than Codelco, rated A1. Banker estimates for Codelco’s spread range from 250bp-400bp over Libor. Timing on both deals is unclear, but bankers say funds are limited and 2 similarly rated Chilean quasi-sovereigns would likely compete if launched at the same time. Enap posted a $958m loss in 2008, mainly due to the fact oil prices hit an all time high in July and then plummeted dramatically through the rest of the year. This resulted in expensive raw material purchases in the first half and low-yielding sales in the second, says the company. Also, in Chile, AES Campiche is heard close to wrapping up a project loan after downsizing to $220m from $445m, and reducing the tenor to 7 years from 10 years. Pricing starts at 350bp over Libor, stepping up to 400bp.

Chile’s central bank is expected to make a 25bp cut to its monetary policy rate on May 7, leaving it at 1.50%. This would be less than the 50bp chopped off in April and the 250bp cut made in March. Morgan Stanley says that “although the choice between 25bp and 50bp is likely to be close, we think the central bank will choose the former due to the recent steepening in the curve and as signs of stabilization in economic activity have started to surface.” Bulltick expects the rate to end the year at 1.25%, but sees an increased likelihood of a drop to 1.00%.Celfin Capital, which also forecasts a 25bp cut, recently chopped its forecast for Chilean GDP growth to 0.3% from 1.4%. It maintains its estimate of 4.0% expansion in 2010. And Goldman Sachs says Chile will cut the policy rate by another 25bp/50bp on Thursday; to 1.25%-1.50%. “At this juncture, a 25bp rate cut seems more plausible than another 50bp rate cut. The MPC could also communicate the intention to keep the policy rate low for a considerable period of time and we do not rule out other policy initiatives aiming to flatten the yield curve,” it adds.

Bellwether issuer Codelco could be the next big LatAm name to launch a syndicated loan. Bankers are pitching the Chilean quasi-sovereign copper miner an up to $400m 3-year facility whose proceeds would roll over a similarly sized deal due in June. A transaction could be announced in the coming weeks, say syndications executives, though no mandate has yet been awarded. Pricing estimates for the 3-year hover around 275bp over Libor area, give or take 25bp, depending on different shops’ estimates, though one syndicator at a leading shop believes it should be closer to 350bp-400bp. The main reference point is Bimbo’s recently syndicated $900m 3-year tranche, which pays 275bp over Libor/TIIE. Codelco (A1) is higher rated than Bimbo (Baa2) and liquidity premia have edged upwards since Bimbo priced in late 2008. Codelco officials have apparently been in New York meeting bankers to discuss a deal. Syndications bankers say at least one informal club is being formed that could include some of the more active LatAm lenders. HSBC, RBS, BBVA, Bank of Tokyo Mitsubishi (BoTM), Santander, Calyon, Citi and BNP are among those pitching. Most already lend to Codelco in some capacity. Codelco, which tapped the bond market in January for $600m in 7.5% of 2019 notes through HSBC and JPMorgan, is hoping to diversify its funding base. Bank loans, which are prepayable without penalty, provide it with the most flexibility. Financing at tenors of 5 years and above has become expensive, say bankers, explaining Codelco’s choice of a shorter tenor. In Q3 2007, Codelco raised $400m in 7-year funds at record tight pricing of 12.5bp over Libor in year 1, 15.0bp in years 2-4, 17.5bp in year 5 and 20.0bp in years 6 and 7. BBVA led that deal, joined by BoTM, EDC and RBC.

Chile retailer Ripley has sold three shopping centers to Corp Group Activos Inmobiliarios, owned by the Saieh family, for about $122.5m, the seller says in a filing with the local securities commission. The malls sold are Mall del Centro de Santiago, Mall del Centro de Rancagua and Mall Panoramico. Celfin Capital equity analyst Barbara Angerstein says the divestitures are part of Ripley’s plan to sell stakes in more mature malls and to invest in new malls that generate more profit. The company also plans to invest in retail concepts and credit cards, which it considers core businesses, she says. In February Ripley sold a 25% stake in the Calama Mall to Falabella for an undisclosed price.

Chile presidential candidate and businessman Sebastian Pinera has hired Celfin Capital to evaluate alternatives for his stake in airline LAN Chile, including a sale. In a filing with Chile’s securities commission, Inversiones Santa Cecilia, one of the companies the Piñera Group controls, says it has hired Celfin to evaluate a sale of its 7.3% stake in LAN, which is worth roughly $210m. Jorge Errazuriz, vice chairman of Celfin, tells LatinFinance that the shop has been given the mandate to evaluate a sale of all of Piñera’s holdings in the airline, which add up to more than 27%, or $788m. Piñera says in a statement that a sale should take place before March 2010, the same month when elections will take place.

Falabella has sold $228m equivalent in inflation-indexed bonds on Chile’s domestic market. The Chilean retailer priced UF3.50m ($123m) in 4.00% of 2033 bonds at 94.77 to yield 4.40%, and UF3.00m in 2.80% 2015 bonds at 97.92 to yield 3.29%. Proceeds will go to the early refinancing of a bond due in December. Banchile and Larrain Vial managed the sale, rated AA on a national scale. Falabella’s CMR Falabella credit services unit sold April 2 CLP90bn ($155m) in 2015 bonds backed by credit card receivables. The CMR unit is also planning a domestic placement in Colombia of up to COP100bn, with the timing remaining to be set. Falabella’s Mall Plaza unit is expected to place a Chilean domestic issue of up to UF4m later this year.