The Republic of Chile has raised $1.5bn during its first visit to the dollar markets this year, landing what the issuer calls the lowest-ever coupon and yield for an emerging market bond at the 10 and 30-year points. “It’s a very strong credit. No new issue premium and difficult to see much value in such tight spreads. Even so, the book was hugely oversubscribed,” says a North American EM portfolio manager following the process. Indeed, demand for the 10-year tranche reached $4.1bn while the 30-year saw $4.8bn, with each getting approximately 300 accounts to participate. The $750m 2022 priced at 98.858 with a 2.250% coupon to yield 2.379%, the tight end of UST+60bp-area guidance which followed UST+75bp-area whispers. A $750m 2042 priced at 98.398 with a 3.625% coupon to yield 3.714%, the tight end of UST+80bp-area guidance following earlier UST+95bp whispers. The bonds were quoted trading up 0.30 in the grey, after being up as much as 0.50 earlier in the day, according to investors. “In terms of trading in the grey, it tells me they tightened to the right point. Like everything else these days, they priced extremely tight,” says a second EM investor. Chile revisited the debt capital markets with the objective of developing its yield curve and issuing a long-end reference benchmark for future corporate Chilean borrowers, as well as to pre-finance at low rates. Bank of America Merrill Lynch, HSBC and JPMorgan managed the A+/Aa3 rated transaction. Further investment-grade sovereign issuers are expected to emerge, investors say, with Brazil tipped to possibly return before year-end or early 2013 to retap its 2023 and bring it closer to a $3bn targeted benchmark size. Uruguay is another candidate mentioned by the buyside that could take advantage of low rates.
Category: Bonds
Colombian Prices Hotel-Backed Bond
Hoteles Estelar has issued COP80bn ($44m) in 2027 asset-backed bonds in Colombia’s domestic market. The bonds pay IPC+4.25%, and are guaranteed by the La Fontana hotel in Bogota and Hotel Intercontinental in Cali. The hotel operator plans to use half of the proceeds to repay debt, with the other half earmarked for a landmark hotel project in Cartagena. Corficolombiana and Casa de Bolsa led the transaction, rated AAA on a local scale. Estelar debuts in the bond market with the deal, and will look to issue shares in a few years, say people familiar with its plans.
H2Olmos Taps Domestic Bond Market
H2Olmos has issued PES330m ($128m) in Peru’s local bond market. The water concession unit of Brazil’s Odebrecht sold a PEN78m 2018 bond paying 5.40% and PEN253m inflation-linked 2032 bond with an interest rate of 4.25%. The 6-year tranche saw 2.75x demand and the 20-year 2.26x. Scotia managed the sale, rated AA+/AAA on a national scale. H2Olmos has a 25-year concession to construct, operate and maintain the Olmos irrigation project in Peru.
Banco de Chile Aims for Peruvian Tap
Banco de Chile is preparing to issue approximately $100m in Peruvian sol-denominated bonds in a private RegS-only deal, say people familiar with the bank’s plans. The transaction is expected to have a maturity of 5-10 years and proceeds will be used for loan portfolio financing and general corporate needs, says S&P, which assigns an A+ rating. JPMorgan is heard to be managing.
Banco Industrial Sets Target
Guatemala’s Banco Industrial is aiming for a low 6.00%-area yield on a new $300m 2022 senior unsecured bond, according to people following the deal, expected to price as soon as today. The price talk is inside Industrial’s own $150m 10-year subordinated Tier 2 bonds, which were trading around 6.79% Wednesday. Investors expect the deal to offer an attractive pickup to the Guatemala sovereign (Ba1/BB/BB+), trading recently at 4.20%-4.30% levels. Baa3/BB Industrial ended a 3-day US, European and LatAm roadshow Wednesday. Proceeds from the sale will be used to address short-term debt and fund growth of its credit portfolio. Bank of America Merrill Lynch and Citi are managing. The bond will be issued by the Industrial Senior Trust entity and comes with a guarantee by Banco Industrial.
Banobras Plots Local Issue
Banobras plans to issue up to MXP5bn ($385m) in bonds in the Mexican domestic market. The government development bank plans to issue 3-year bonds paying a spread to the TIIE benchmark. It is estimating a November 7 sale, according to a selling memo. Banamex and BBVA Bancomer are managing the sale, rated AAA on a national scale. Banobras last issued in the local market in July via Banamex, when it sold MXP2bn in 2022 bonds at 6.12%, or Mbonos+50bp, after generating 1.31x in demand.
Brazilian Schedules Investor Meetings
Usina Sao Joao (USJ) Acucar e Alcool plans to meet bond investors in Europe, Latin America and the US, ahead of what would be a debut bond issuance. The Brazilian sugar and ethanol producer is likely targeting a 2022 bond of up to $300m, according to Fitch, which assigns a BB minus rating to the potential transaction. USJ is scheduled to see accounts beginning in London and Santiago on Friday, followed by visits to New York Monday, Boston Tuesday, and Los Angeles on Wednesday. Credit Suisse, HSBC and Itau are managing.
Brazilian Telecom Closes Debenture
Companhia de Telecomunicacoes do Brasil Central, known as Algar Telecom, has completed a domestic BRL294m ($135m) bond sale, according to the CVM, upsizing from BRL220m. A BRL61m 2017 tranche pays the DI+1.4%, in from a DI+1.5% ceiling, and a BRL233m 2019 inflation-linked tranche pays 6.0%, inside of a 6.6% limit. Algar is raising funds to repay debt and for working capital. Banco Votorantim, Itau and Santander are managing the sale. Part of the Algar Group, Algar Telecom offers telephone, cellular, cable television and data service in six Brazilian states.
Caixa Aims Bond
Brazil’s Caixa Economica Federal has emerged with yield guidance of low UST+200bp-area, according to sources following the process, for what is expected to be a new 2017 bond of as much as $1bn. The state-owned lender is scheduled to wrap up US, European and Asian investor meetings today, with pricing by the end of the week. What would be a debut for BBB/Baa1 Caixa is being compared to Banco do Brasil’s 2017 bonds, trading at G-spread of 204bp. Bank of America Merrill Lynch, Deutsche Bank and HSBC are managing the process.
CFR Defines Domestic Bond Plans
Chile’s CFR is targeting November 8 for a domestic bond issue, according to people familiar with the plans. The pharmaceutical company started investor meetings this week, and is expected to issue UF2m ($96m), divided among three possible tranches. A 3.5% coupon 5-year UF bullet tranche, a 4.0% coupon 21-year tranche with a 10-year grace period, and a 6.5% coupon 5-year peso-denominated bullet tranche are the options. Proceeds could be used for M&A activity. IMTrust and Santander are managing the transaction, rated A+/A on a national scale. A sale would represent CFR’s first bond issuance.