Several Chilean issuers are holding off domestic bond transactions until next year in the face of comparatively high spreads. For instance, Caja de Compensacion La Araucana is now targeting next year for a CLP40bn ($77m) 5-year bond, which had been expected as soon as December. Like other Chilean issuers, La Araucana has decided to wait until next year with the hope that it can lock in cheaper pricing then. As the company doesn’t have a pressing need for the funding, it can wait, says a person familiar with the process. BCI is managing the sale. Araucana is rated A on a national scale. Quinenco has also postponed its up to UF4.65m ($200m) local market bond offering, which was previously expected to price by month’s end. It is instead looking at the beginning of January, says a person knowledgeable about the transaction. The holding vehicle for the Luksic family is preparing a 7-year bond of up to UF2.3m in size with a 3.5% coupon and 2-year grace period, and a 21-year bond of up to UF2.3m with a 4% coupon and an up 15-year grace period. It will use the proceeds for its investment. Banchile and BBVA are managing.
Category: Chile
Forum Delays Expected Issue
Chilean auto lender Forum has delayed its approximately UF1m ($42.7m) local bond issue until at least January, says CEO Raul Aronsohn. The company, which was expected to issue this week, had anticipated better market conditions, but high local spreads have made a 2012 issue more attractive for a borrower that can afford to wait, he says. The borrower can choose between a 2.5-year bullet in pesos with a 6.15% coupon, a 5-year bullet in pesos with a 6.3% coupon, a 2.5-year bullet in inflation-linked UFs with a coupon of 3.3% and a 5-year bullet in UFs with a 3.3% coupon. However, Aronsohn says he favors pesos. “If we go to UF we have to swap them against pesos after that, so we prefer to go straight ahead to pesos,” he says. Banco Estado de Chile is managing the issue, rated AA+/AA on a national scale.
Agrosuper Raises Local Bond
Chilean food products company Agrosuper has sold UF5m ($215m) in domestic bonds, it says. The 21-year bonds priced at 89.76 with a 3.8% coupon to yield 4.78%. Banchile and LarrainVial managed the sale, rated AA minus/A on a national scale.
Essal Pulls Plug on Equity Sale
Corporacion de Fomento de la Produccion (Corfo) pulled the plug on an $80m-$90m offering of shares in water utility Essal after the sale process failed to clear a minimum floor price. The government financial entity is looking to sell 40% of Essal to get its position down to 5%, and had been planning to place 387.7m secondary shares at CLP90-CLP100 per share. It was to be repeat, though at a smaller size, of what Corfo did earlier in the year with its positions in Aguas Andinas, Essbio and Esval, under a broad government plan to sell assets to cover reconstruction costs from the 2010 earthquake. It is not known if Corfo might seek an M&A transaction for the stake, a move it was heard considering before electing a follow-on sale. Banchile, Bank of America Merrill Lynch and IMTrust were managing.
Chile’s Forum Preps Local Issue
Chilean auto lender Forum is readying an approximately UF1m ($43m) local bond issue this week, says a person familiar with the process. The company can choose from a 2.5-year bullet in pesos with a 6.15% coupon, a 5-year bullet in pesos with a 6.3% coupon, a 2.5-year bullet in inflation-linked UFs with a coupon of 3.3% and a 5-year bullet in UFs with a 3.3% coupon. Banco Estado de Chile is managing the issue, rated AA+/AA on a national scale.
Essal Set for Share Offering
Chile’s Essal is scheduled to announce pricing today on an up $80m equity offering as government entity Corporacion de Fomento de la Produccion (Corfo) looks to reduce its 45% position in the water utility. The issuer is targeting CLP90-CLP100 per share for the 387.7m secondary shares, indicating a likely size of CLP34.89bn-CLP38.77bn ($67m-$75m) The all-local sale is essentially an IPO, as Essal shares are illiquid, and the company is much smaller than the other government-backed water utilities that have come to the market this year. Corfo had also been considering a direct sale of a stake through an M&A deal, as it looks to get its position down to 5%. The sale is a repeat, though at a smaller size, of what Corfo did earlier in the year with its positions in Aguas Andinas, Essbio and Esval, under a broad government plan to sell assets to help with reconstruction costs from the 2010 earthquake. Banchile, Bank of America Merrill Lynch and IMTrust are managing the sale.
SQM Preps Local Debt Issue
Chilean chemical company SQM plans to raise up to UF2.5m ($107m) through a domestic bond issue. It will have the option of choosing among 10-year and 30-year UF-denominated notes. Proceeds will cover liabilities, investment financing and other general purposes. The issuer, rated AA minus on a national scale, does not name the lead banks or provide timing on the sale.
Agrosuper Holds Bond until Tuesday
Chilean food products company Agrosuper has pushed back to Tuesday its local bond as various factors conspire to slow down an up to UF5m ($235m) offering that was expected today. Fallout from the La Polar scandal has generally lengthened the time it takes investors to get credit approval, but recent accusations of poultry price collusion against Agrosuper and others haven’t helped either. Indeed the news could costs the borrower a few basis points even though any fine is likely to be comparatively small and unlikely to be imposed for quite some, say people familiar with the situation. Furthermore, investors sometimes need more time to familiarize themselves with companies such Agrosuper that have no outstanding public debt. Among the issuer’s options are a 7-year UF bond with a 3.4% coupon, a 7-year peso issue with a 6.1% coupon, a 10-year UF bullet with a 3.4% coupon and a 21-year UF offering with a 3.8% coupon. Banchile and LarrainVial are managing the deal, rated AA minus/A on a national scale.
Antofagasta Offers Chile Mining Stake to Marubeni
Chile’s Antofagasta has agreed to sell a 30% stake in the Antucoya copper venture to Japan’s Marubeni for $350m. The companies signed a memorandum of understanding which also commits Marubeni to cover its share of development costs in the mining venture. The MOU sets a number of conditions prior to striking a definitive deal in the first quarter of 2012. If all goes as planned, Antofagasta estimates the transaction would then close sometime during the second half of 2012. Officials at Antofagasta and Marubeni could not immediately be reached to comment further. The Antucoya copper project is expected to generate roughly 80,000 metric tons of copper cathodes a year with an estimated mine life of 20 years. The project holds proved and probable ore reserves of 642m metric tons. The announcement came as the company’s board gave the final approval to move ahead with the project’s investment. Antofagasta and Marubeni are also partners in Chile’s Minera Los Pelambres, the Esperanza copper and gold project and in the El Tesoro mine property.
Corpbanca Put On Watch Negative
Fitch has placed Corpbanca’s foreign and local currency long-term issuer default ratings (IDR) on watch negative as a result of its recent Banco Santander Colombia acquisition announcement. The 95% stake is expected to be positive with respect to marketshare but “will place Corpbanca’s capitalization under pressure while its capacity to regenerate capital from earnings and after dividend payments will be challenging,” says Fitch. The agency adds that following the $1.15bn acquisition’s completion, the ratings will be downgraded.