Banco del Estado de Chile has issued UF2m ($88m) in 30-year subordinated domestic bonds, according to people following the sale. The bonds priced at 101.99 with a 3.50% coupon to yield 3.39%, or government bonds plus 80bp. The sale saw four times demand. Next week, Sociedad de Rentas Comerciales is expected to sell UF1m in the Chilean market, with the proceeds to be used for refinancing and investments.
Category: Chile
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Chilean Hybrid Gets $3.6bn Demand
Chilean utility AES Gener has raised $450m in new junior subordinated hybrid bonds, with demand topping $3.6bn, according to people following the sale. The 2073 NC5.5 priced at par with an 8.375% coupon to yield tight to 8.500%-area guidance and earlier 9.000%-area talk. The bond traded 102.6-103.3 Wednesday afternoon, according to a trader. Gener’s coupon is reset after 5.5 years and every five years thereafter by floating rate. Interest payments are deferrable at the company’s discretion. The bonds receive 50% equity treatment by Fitch. Italian utility Enel’s subordinated 2073 NC10 bond, trading to yield 7.40% Tuesday, was seen as the most appropriate comp. Citigroup and Goldman Sachs managed the 144a/RegS transaction, rated Ba2/BB/BB, below the issuer’s Baa3/BBB/BBB minus senior rating. The bond raises funds for the generator to finance equity contributions to the Alto Maipo hydroelectric and Cochrane coal-fired generation projects in Chile. Gener closed this week a $1.2bn 20-year syndicated loan to fund the 531-megawatt Alto Maipo. The IDB, IFC, CorpBanca, Banco del Estado de Chile, BCI and Itau Chile, and KfW and DNB make up the lending group. Cochrane was funded through a $1bn 17-year package closed in April.
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Gener Prepares to Test DCM
AES Gener has released 9%-area initial price thoughts for a junior subordinated hybrid bond pricing as soon as today, according to people familiar with the issuer’s plans. The Chilean generator plans to sell $450m in the 2073 bonds, and possibly become the first of the group of borrowers roadshowing in recent weeks to complete a deal before the end of the year. Others in the pack include Hochschild Mining, Idesa, Trinidad and Tobago and the Bahamas. Argentina’s YPF is meeting investors this week in the hopes of getting a deal done next week. Citi and Goldman Sachs are managing the Gener transaction, rated BB. The bond should allow the Chilean power generator to raise funds to finance its equity contributions to the Alto Maipo hydroelectric and Cochrane coal-fired generation projects, as well as to repay upcoming maturities. It was approved for a $450m equity capital raise in August. The hybrid notes will receive a 50% equity credit, Fitch says, given that interest payments on the notes are deferrable at the company’s discretion. Also, the notes’ subordinated ranking provides loss absorption for more senior indebtedness of the company.
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Chilean Property Manager Plans Local Sale
Sociedad de Rentas Comerciales plans to raise up to UF1m ($44m) in Chile’s local bond market, according to people familiar with the matter. The property company has finished a roadshow and plans to issue as soon as next week. The borrower can choose among a 7-year UF-denominated tranche with a 3-year grace period and a 3.50% coupon, a 6.5% 7-year peso-denominated tranche with a 3-year grace period, and a 4.0% 21-year tranche with a 10-year grace period. Half of the funds raised are expected to be used to refinance long term liabilities and the other half to finance the issuer’s investment program. IMTrust leads the sale, rated A/AA minus on a national scale.
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Chilean to Open in Hong Kong
Banco Security has been authorized by the Hong Kong Monetary Authority to open a representative office in Hong Kong, the Chilean bank says. It is expected to begin operations in the first quarter of 2014.
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Moody’s Cuts Gildemeister
Moody’s has downgraded Automotores Gildemeister to B1 from Ba3, it says. The agency notes a continued deterioration of Ebitda margins and high capital expenditures that pushed the Chilean auto distributor’s total debt-to-Ebitda to 7.7x times during the 12 months through September. This was up from 3.5x times the year before, it says. The deal should remain above 6.0x in the near future. The outlook is negative. The move follows Fitch’s downgrade to B last week.
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BancoEstado Plans Debt Sale
BancoEstado is planning to issue up to UF2m ($88m) in Chile’s local bond market on Thursday, say people familiar with the bank’s plans. The 30-year subordinated bonds are expected to have a 3.5% coupon. BancoEstado is managing the transaction, rated AA/AA+ on a national scale. It last issued in September, when it sold UF2m in 2042 subordinated bonds. The 4.0% coupon bond priced at a premium to yield 3.49%, or government bonds plus 90bp.
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Moody’s Cuts CorpGroup
Moody’s has downgraded CorpBanca to Baa3 from Baa2 and parent CorpGroup to Ba1 from Ba3, it says. The agency is concerned that the Chileans’ association with fellow Alvaro Saieh-controlled entity SMU has “hurt the funding flexibility and risk profile of both the bank and its holding.” SMU breached bond covenants earlier this year and needed a capital injection from Saieh, who has recently announced he is considering seeking a merger for CorpBanca. Contagion from SMU has led to higher funding costs for the Corp entities. “These entities require maximum funding flexibility to execute their business development strategy in Chile and Colombia, and reduced funding flexibility could impair the growth and profitability of the bank’s franchise,” Moody’s says. It is reviewing both for an additional downgrade.
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Chilean Clinic Wraps Up Bonds
Chile’s Clinica Las Condes has sold UF1m ($44m) in 21-year domestic bonds, according to people following the sale. The bonds priced at 100.55 with a 3.95% coupon to yield 3.90%, or government bonds plus 147bp. The health services provider is raising funds for expansion projects. BICE managed the transaction, rated AA+/AA+ on a national scale.
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Chilean Raises $57m in JPY Placement
Banco de Chile has raised JPY5.8bn ($57m) through a private placement in the Japanese bond market, according to people familiar with the transaction. Issued on the back of reverse inquiry, the 2019 bond priced at par with a 1.03% coupon, to yield mid-swaps plus 65bp. Citi was sole lead. The Aa3/A+ Chilean raised a JPY11.1bn ($112m) euroyen last month in its first-ever deal in the Japanese bond market, which came at MS+50bp.