Bankers are expressing surprise at how well CMPC’s $600m 5-year loan package has been progressing despite tough market conditions and relatively tight pricing. “It looks like the Chilean market has its own demand. CMPC is developing a [decent] level of interest,” says one banker. It is thought that banks are keen to participate in what is a partial refinancing for a credit that is an infrequent issuer in the loan market. Another banker notes how well pricing has held up for Chilean names in comparison to other LatAm borrowers. How long this situation will last is open to debate, but some bankers believe that the country’s borrowers will eventually face more expensive pricing. “Cost of funding in the dollar market is high and international banks are limited by this,” says another banker. The pulp and paper company is offering Libor+65bp on a $400m 5-year term loan and Libor+70bp on a $200m 5-year revolver, which also offers a 20bp utilization fee on top of the base margin if over half is drawn. The revolver has a shelf life of 3 years and both tranches start amortizing in month 42. Banks will get 45bp for MLA tickets of $50m, and 30bp for lead manager tickets of $25m. Bank of America Merrill Lynch, Bank of Tokyo Mitsubishi, EDC, JPMorgan and Scotia are leading.
Category: Chile
GeoPark Sells Down in Chile
LatAm E&P company GeoPark has agreed to sell a 10% stake in its Chilean business to Korea’s LG International for $78m in cash. The two are strategic partners since last year after acquiring a portfolio of upstream assets throughout Latin America. In May, LG paid $70m for a 10% stake in the Chile operation. The deal is expected to close in October.
Chile Holds Rates
As expected, Chile’s central bank has held the benchmark interest rate at 5.25%. In its note announcing the decision, it cites slower growth in the US and Europe with increasing risks in the external financial environment. Bulltick expects the rate to remain at 5.25% through the end of the year.
Copec Gets Local Issue
Empresas Copec has raised UF1.3m ($60m) in a domestic bond sale, it says, bringing the first new issue to that market in about a month. The Chilean fuel and forestry conglomerate priced the inflation-linked 2021 bonds at 98.75 with a 3.25% coupon to yield 3.40%, or Chilean government bonds plus 115bp. Copec has marked the proceeds for financing its investment plan. IMTrust managed the sale, rated AA on a national scale. The deal comes out of a possible issuance of UF1.5m that also included the possibility of CLP-denominated 2021bonds. An up to UF2m 2041 deal from electricity holdco Grupo Saesa had also been expected as soon as this week, though a banker on it says a definitive date has not been set and it would come next week at the soonest.
Santander Chile Sells CLP Bond
Santander Chile placed CLP25bn ($52m) in domestic bonds, it says. The 2016 notes priced at 103.11 with a 6.75% coupon to yield 6.05%. Santander managed the sale, rated AAA on a national scale.
Chile to Make Rate Call
Chile’s central bank is to decide its monetary policy today. Analysts expect the bank to again keep the benchmark rate steady at 5.25%, citing the bank’s own poll of traders.
Chiloe Swaps CFOs
Cultivos Marinos Chiloe has named Andres Hoffman CFO, in a move effective October 17. He replaces Cristian Gazabatt, who has served as CFO since April. The salmon producer filed locally to issue an IPO in June and has been aiming for an October or November deal, market conditions permitting. Chiloe expects a 33% float and would use proceeds to help finance a $170m investment plan.
CMPC Launches $600m Loan Package
Chile’s CMPC held bank meetings Thursday in New York to launch a $600m 5-year loan package into syndication via leads Bank of America Merrill Lynch, Bank of Tokyo Mitsubishi, JPMorgan and Scotia, say market participants. The pulp and paper company is offering Libor+65bp on a $400m term loan and Libor+70bp on a $200m revolver, which also offers a 20bp utilization fee on top of the base margin if over half is drawn. Banks will get 45bp for MLA tickets of $50m, and 30bp for lead manager tickets of $25m. European banks may consider such pricing too tight and stay away, says a banker looking at the trade.
Fitch Lowers GCE
Fitch has lowered the credit rating on Chile’s Compania General de Electricidad (GCE) to BBB minus from BBB. The move “reflects continued weakness of its credit metrics, and no prospects for meaningful medium-term recovery,” the agency says. Leverage is a particular problem, with debt to Ebitda at 5.8x for the year ended June 30, compared to 4.9x at year-end 2009. Though the June number is an improvement from 6.2x at year-end, Fitch expects it will remain above 5x over the next three years. The agency could lower the company’s credit standing if debt-to-Editda rising above 6x. The outlook is stable.
CMPC Preps $600m Loan Package
CMPC is heard preparing a $400m term loan and $200m revolver, according to market participants. Additional details on the facilities were expected to emerge at a bank meeting scheduled for today. The Chilean pulp and paper company deal has mandated Bank of America Merrill Lynch, Bank of Tokyo-Mitsubishi, JPMorgan and Scotia as leads. CMPC last tapped the loan market in 2008, for a $250m 5-year at Libor+55bp, via BBVA, BNP Paribas, BOTM, Santander and Export Development Canada. It has since borrowed from the bond market twice, for $500m each in 2009 and 2011.