Category: Chile

Chilean retailer Falabella is preparing to sell Wednesday up to $284m-equivalent in domestic bonds denominated in CLP and the UF inflation-indexed unit, according to a company finance official. Falabella can place up to UF8m-equivalent using any combination of 5.3% 2015 peso bonds, 2.8% 2016 UF bonds, 3.8% 2021 UF bonds or 4% 2033 UF bonds. The exact amounts will depend on demand and be determined during an auction process. Banchile and Larrain Vial are managing the sale, rated AA on a national scale. Proceeds will go to the early refinancing of a bond due in December. At the beginning of this month, the retailer’s CMR Falabella credit service unit sold CLP90bn ($155m) in 2015 bonds backed by credit card receivables, priced to yield 6.29%. Falabella is also in the process of preparing a COP150bn issue in Colombia for CMR and a Chilean UF4m offer for its Mall Plaza unit.

Chilean food and agricultural products producer Empresas Carozzi has sold $126m-equivalent in 7 and 21-year inflation-indexed bonds on the domestic market. Carozzi issued UF1m ($36m) in 4.60% of 2016 bonds priced at 102.08 to yield 3.55%. It also priced UF2.5m in 5.70% of 2030 bonds at 103.25 to yield 4.84%. Proceeds from the transaction, rated A+ on a national scale, will be used to refinance debt. BBVA managed the sale.

Project sponsors seeking long-dated funds for sizeable transactions will likely have to revamp financing to make it palatable to lenders. AES Campiche, the Chilean hydro project had to cut tenor to 7 years from 10, and downsized to $220m from $445m after sourcing 10-year funds in the local bond market. The alterations helped put AES on the home stretch – pricing was maintained at 350bp stepping up to 400bp over Libor – and closing is expected as early as next week. The remodeling will undoubtedly have implications for Brazil’s Odebrecht’s recently launched $660m 11-year platform financing, part of a $1.3bn debt package, as well affect a similarly sized platform deal for Schahin. “Funding costs for banks are much higher for 10 years than they are for 7,” says an executive familiar with the transaction. To obtain long-dated funds, banks must pay a higher up-front cost , which means they will look to be compensated for this cost from the outset of a deal. “There’s been a general trend towards the mini-perm structure and away from [long-dated] loans that fully amortize,” says a project finance banker. For Odebrecht, whose deal offers slimmer pricing in a lower-rated country, the Campiche modifications may mean an outright overhaul. Odebrecht is offering Libor plus 300bp in year 1 with step-ups. Commitment fees are 120bp and $50m tickets earn participation fees of 225bp. Santander, BNP Paribas and Societe Generale are leading. Schahin, which has yet to launch, may also end up doing so at a shorter tenor with plans to refinance, or source cash elsewhere.

CTC Chile has placed CLP20bn ($35m) in bonds on the local market in a follow-up to last week’s $180m sale. The unit of Spain’s Telefonica priced the 6.05% 2014 notes at 100.23 to yield 5.99%. Proceeds will refinance debt. BBVA managed the sale, rated AAA on a national scale. It priced April 15 UF5m ($180m) in 3.50% 2014 notes out of the same program, to yield 3.23%.

Chile’s pension funds’ assets under management (AUM) increased 3.7% to $82.2bn in March, compared with February figures, according to Celfin Capital. Although pension funds’ AUM have been increasing every month since October, they are still far from the record breaking $121.5bn seen in March 2008, says equities analyst Cesar Perez. He adds that Chilean pension funds remain risk-averse and have been reducing exposure to local equity. In March, pension funds had $13.2bn invested in local equities, down from $22.2bn in March 2008. Last month pension funds sold $36.8m in local equity.

Celfin Capital has chopped its forecast for Chile GDP growth to 0.3% from 1.4%. It maintains its estimate of 4.0% expansion in 2010. “We expect to see a recovery in Chilean GDP, in seasonally adjusted terms, starting in 3Q, but with a significant year over year real comparison only in 4Q,” the shop says. This expectation of a relatively quick upturn is predicated on the absence of major imbalances in Chile’s economy and momentum exerted by laxity in monetary policy, it adds. Celfin also pares forecasts for world growth. It now expects a contraction of 1.0%, versus a previous call of 1.5%.

America Movil has priced UF4m ($145m) in 5-year bonds on Chile’s domestic market at 98.61 with a 3.00% coupon to yield 3.31%, or 141bp over the government, after drawing demand of around UF6.4m. “It went fantastically well,” America Movil CFO Carlos García Moreno tells LatinFinance. He adds that the price equates to roughly 4.5% in dollars, and was reduced from an initial 3.5% yield target. The America Movil dollar-denominated 5.5% of March 2014 was yielding roughly 6.0% recently. The Mexican mobile telecom, whose Claro brand operates in Chile, had aimed to sell up to UF4m in 3.0% 2014 bonds, up to CLP83bn in peso-denominated 5.5% 2014 bonds or a combination of the two, capped at UF4m. It scrapped the CLP piece. “The market is now more biased towards UF,” says Garcia, adding that pension funds, banks and investment funds were among the buyers. “It was very widely spread amongst a lot of different types of investors,” says treasurer Ricardo Rivera. He declines to estimate the new issue concession, based on a lack of comparables. “It’s a new asset class for the Chilean market and it’s a new type of issuer. I don’t think they have anything to compare it to,” he adds. The Mexican wireless provider claims it is the first “huaso” bond, or issue in Chilean currency directly by a foreign entity. The transaction via Dutch auction was rated AA+ locally. “Now that we are there, it will be our intention to keep Chile as one of our funding options,” says Garcia. “We will work towards developing what we have in Mexico, where we have a well established market, a well defined yield curve, and we’ve been coming to market with some regularity, certainly once, sometimes twice a year,” he adds. Rivera says the company may issue again this year at a different maturity, depending on market conditions. He stresses the diversification benefits of the Chilean market. “We are not planning on swapping anything, but in dollar cost terms it’s substantially cheaper than what we could get in inte

Chilean lending and social security institution Caja de Compensacion Los Andes has sold CLP30bn ($52m) in bonds on the local market. The 2013 notes priced at 100.52 with a 6.15% coupon to yield 5.99%. Proceeds will fund Los Andes’ long-term investment needs. Banchile-Citi managed the sale, rated A+/AA- on a national scale.

CTC Chile has sold $180m equivalent in bonds denominated in the UF inflation-linked unit on the local market, it says. The Chilean unit of Spain’s Telefonica priced UF5m ($180m) in 2014 notes priced at 101.20 with a 3.50% coupon to yield 3.23%. It had filed to sell up to UF6m in 5 and 10-year notes. The funds proceeds the issue will refinance a bank loan due at the end of the year. BBVA managed the sale, rated AAA on a national scale. Regional rival America Movil is also preparing an issue, to be the first by a foreign corporate in Chilean currency, expected within the next week. The operator of the Claro brand in Chile has yet to set a date for the sale of up to UF4m in 3% 5-year notes via Banchile, denominate in UF and/or CLP.

Chilean shipping company Vapores plans to raise $750m through capital increases and loans from ship leasers. Vapores is in the middle of a $130m share subscription, and plans to follow that with a second, $220m equity increase as part of a “financial strengthening program.” The plan also calls for $400m in “contributions” from shipbuilders that have leasing contracts with Vapores and its subsidiaries. The company does not specify the nature of the contributions, mentioning only that part of them would be capitalized. Mid-March, Vapores hired HSH Nordbank subsidiary HSH Corporate to advise on a new business plan aimed at dealing with a downturn in global shipping. The bank will be evaluating a possible sale of non-core assets and contract renegotiations among other cost-cutting measures, Vapores says.