Category: Bonds

A July 30 Daily Brief entitled “Taesa Issues Bonds in 2 Tranches” incorrectly identifies the lead managers. Banco do Brazil was the lead, with BTG Pactual, Citibank and HSBC bookrunners.

In one of the year’s most anticipated LatAm DCM deals, Chile has raised $1.52bn at lower levels than expected in its first cross-border bond issue since 2004. The Aa3/A/A+ sovereign drew more than $10bn in orders, according to bankers on it, and gave little concession on price. “The demand was such that they could do a slightly expensive offer,” says a participating North American EM investor. A $1bn 2020 priced at 99.877, with a 3.875% coupon to yield 3.890%, or UST plus 90bp, the tight end of 95bp area guidance, tight to initial whispers of low 100s. Codelco’s 2019 was seen at low 100s over at the time of pricing. A $520m equivalent 2020 debut global peso-denominated piece meanwhile priced at par with a 5.500% coupon, to yield the tight end of 5.625% area guidance, versus “high 5%s” whispers. With size and maturity dictated well in advance, the main question going into the sale was how much of a concession Chile – the region’s star credit on one hand, but with an illiquid curve on the other – would offer. Some hoped that a small concession to CDS might mean a yield north of 4%. “It came 5bp-10bp tighter than the CDS. This is justified, considering the scarcity value,” says Eduardo Suarez, EM strategist at RBC. He spots the CDS at 95bp-100bp before the deal, versus 91bp seen by a banker on the deal. The global CLP had investors hoping for a bit more of a concession, being the first in that format from Chile, but it also seemed expensive. “I can buy the same bond in the local market at a higher yield,” says an East Coast-based EM portfolio manager who passed. He notes a pre-launch domestic 10-year yielding 6.25%, which is equal to about 6.00% after taxes and other considerations. Bankers on the deal note it is typical to price through the domestic curve on such global-local deals. “They had more leverage on price that most issuers,” says one. The dollar bond was up 0.5 points in the gray Thursday afternoon, suggesting that some investors expected upside. The demand

Colombian development bank Bancoldex is planning to issue COP355bn ($190m), the first from a COP1trn program announced in May. The deal will be done in 3 tranches, says a DCM banker with knowledge of the deal. A first piece will be due in 18 months, a second in 33 months and a third in 51 months. All will be pegged to DTF. The banker says the amounts per tranche as well as rates are still being defined. The notes are rated AAA. Proceeds will be used for working capital. Bancoldex unit Fiducoldex will lead the issue.

Colombian public transport management company Transmilenio plans to issue COP130bn ($69m) in local bonds due in 2016, local DCM bankers say. The AAA rated issue will take place July 22 through Alianza Valores.

LatAm issuers of all stripes are lining up to tap a DCM window that looks set to remain open well into the summer. Brisk flow so far this year will likely continue, driven by a fall in risk aversion, ample liquidity and the fact that issuers want to pull the trigger before the August lull to avoid potential volatility later in the year. “You have had a bit of a risk-on session for a little while, which has helped issuance,” Edwin Gutierrez, who helps manage $5bn in EM debt at Aberdeen Asset Management, tells LatinFinance. He notes a bounce in equity markets and an easing of Eurozone concerns. “There are still a number of worries, but we’ve hit an inflection point in market sentiment, broadly,” says a DCM banker. “Investors are there, but they are extracting extra yield given that the market is still not as it was before [the Eurozone debt crisis],” Natalia Corfield, EM credit analyst at ING, tells LatinFinance. Sub-investment grade is paying a premium, Corfield says. Even some high-grade like Pemex and CSN is paying more than they might have earlier in the year, she adds. The market appears to be open even for single B credits, as long as they are willing to pay up. “If you come at the appropriate level, there will be money and liquidity for this asset class,” says another DCM banker, pointing to the pent-up demand demonstrated by a $5bn plus book for Pemex’s $2bn deal and a nearly $3bn book for the $1bn CSN bond. Meatpacker JBS is expected to issue this week following a roadshow, as is Banco BMG with a 2020 Tier 2. Other corporates heard considering issuing in the next few months include Mexico’s Mexicana, Argentina’s YPF Repsol, Chile’s Enap, as well as Brazil’s Sabesp and Electrobras. Barbados will roadshow this week and Argentina’s Chubut province should wrap up a deal. Possible issuance is also heard from Peru, Chile, province of Cordoba, and Trinidad & Tobago. LatAm has issued $47bn in bonds year-to-date, according to Dealogic, versus $18bn in H1 2009.

Colombian public transportation management company Transmilenio is planning to issue local bonds July 22, according to a Bogota-based DCM banker. The notes will be due in 2016. The amount to be issued and terms are still being decided, the banker adds.