Chile took advantage of a break in the clouds hanging over the markets to print Wednesday a $1.35bn equivalent retap and new issue, achieving a record low yield and coupon on the dollar tranche. “Great decision on timing, with the 10-year UST trading at 2.05%,” notes a London -based investor. Indeed, arguably timing couldn’t have been better. With UST yields hitting record lows over the last few weeks, seductively attractive funding costs had been dangling like a carrot in front of any high-grade issuer willing to take the execution risk. As Latin American’s top-rated sovereign, Chile was better qualified than most to step forth in what had been an extremely risk-averse-environment. After some market stability Tuesday, the sovereign announced late Wednesday morning it would issue a new USD 10-year and retap its 5.50% CLP denominated 2020s. An abrupt change in sentiment later in the day sparked a rally in the broader stock markets after reports that US President Barack Obama would announce a $300bn plus stimulus package and the German Supreme Court cut down appeals to prevent aid for peripheral European countries. By coming with whispers in the high 130bp area for a new benchmark 10-year, Chile looked attractive against lower-rated Brazil’s 2021s, which were being quoted at around 138bp over and should trade wide to the single A sovereign. In the end, the $1bn bond priced at 99.131 with a 3.25% coupon to yield 3.381% or 130bp over. The spread was wider than the 90bp achieved last year when the sovereign issued a USD 2020 but pricing came inside the 3.875% coupon and 3.89% yield seen on that trade. “Depending how tight Chile prices and we will be comfortable at a 130bp or 125bp spread. We will likely participate as it presents good value,” noted one London-based EM investor. The CLP retap was a slightly different story after coming at a smaller size than the $500m equivalent first heard in the morning. In the end, the sovereign came at a smaller-than-expected CLP162bn
Category: Chile
Copec May Reopen Chilean Market
Empresas Copec plans to sell a new domestic bond September 15, and with any luck could revive a local market hit by market volatility. The Chilean fuel and forestry conglomerate is now meeting investors targeting up to UF1.5m ($71m) in 2021 bonds, and is able to choose among a UF-denominated tranche with a 3.25% coupon and a CLP-denominated tranche paying 6.25%. IMTrust is managing the deal, rated AA on a national scale. Also expected by next week is a UF2m ($94m) deal from Grupo Saesa after it postponed its offering last week. The electricity holdco is eyeing 30-year bonds paying a coupon of 3.35% as it looks to refinance existing debt. BBVA Chile and IMTrust are managing the sale, rated AA on a national scale. Entel, which also wanted to go last week, has yet to determine when it will try again, but it can afford to wait, bankers say. The telecom had been looking to select among a 5-year CLP-denominated tranche paying a 6.1% coupon, a 5-year UF portion paying a 3.2% coupon and a 21-year tranche with a 3.5% coupon. Bice and IMTrust are managing the sale, rated AA minus on a national scale.
Luksic Adds Terpel Chile Assets
Chiles Quinenco, a conglomerate controlled by the Luksic Group, has agreed to acquire fuel distributor Terpel Chile from Colombia’s Terpel for UF6.7m ($315m). Quinienco plans to incorporate the gas station and related assets into the platform of the Shell Chile assets it acquired earlier this year. The acquisition price includes US$49m in working capital which could be subject to change before the close of the deal, which still remains to be approved by antitrust regulators. Terpel advised by JPMorgan, while Santander did the same for Quinenco.
Vapores Asks Controllers for Debt, Equity
Chilean shipper Compania Sudamericana de Vapores is seeking a$350m in credit lines and $1.2bn in new equity from its shareholders. The move comes after price deterioration and escalating costs led to a $525m loss in the first half of the year. It plans to sign credit lines of $250m and $100m with from majority shareholders Quinenco and Maritima de Inversiones. Also, it will seek $1.2bn through an equity rights offering. The move comes after a similar $500m equity raise completed in July. Vapores also plans to seek a strategic partner for its container shipping business and will split its freight shipping business from the vessels and cargo maritime services managed by the Sudamericana Agencias Aereas y Maritimas unit.
Chileans Hold on Local Offerings
Poor market conditions have forced Chilean borrowers Grupo Saesa and Entel to delay local bond transaction that had been set to price on Thursday. Saesa is now aiming to issue a UF2m ($94m) bond next week if conditions allow, according to bankers on the sale. The electricity holdco had been eyeing 30-year bonds paying a coupon of 3.35% as it looks to refinance existing debt. BBVA Chile and IMTrust are managing the sale, rated AA on a national scale. Less is known about the fate of Entel, which elected not to price up to UF5m ($235m) in domestic bonds on Thursday, say market participants. No rescheduling has been announced, they add. The telecom had been looking to select among a 5-year CLP-denominated tranche paying a 6.1% coupon, a 5-year UF portion paying a 3.2% coupon and a 21-year tranche with a 3.5% coupon. Bice and IMTrust are managing the sale, rated AA minus on a national scale.
Copec Plots Domestic Bond
Chilean fuel and forestry conglomerate Empresas Copec plans to raise up to UF1.5m ($71m) through the issuance of 2021 bonds in the local market. It will chose among two series, a UF-denominated tranche with a 3.25% coupon and a CLP-denominated tranche paying 6.25%. Timing has yet to be announced, but a company official says the deal could take place as soon as next week. Santander is managing.
Santiago Metro Seeks Bonds
Empresa de Transporte de Pasajeros Metro, Santiago’s subway operator, has registered for a domestic bond sale. The Chilean issuer is able to sell bonds of up to UF6.7m ($315m) at maturities of up to 30 years. It is raising funds for refinancing existing debt. Santander has been picked to manage the sale.
Chiloe Sees Oct-Nov IPO
Cultivos Marinos Chiloe, seen as among the next issuers to IPO in Chile, is aiming for an October or November offering depending on market conditions. The salmon producer has been looking to do the transaction before the September 18 Chilean Independence holiday. “We are looking at the market to see when will be the right time to do it, but it is a question of weeks rather than months,” CEO Ricardo Purcell tells LatinFinance. The issuer has not set a size, but Purcell says it should be a 33% float. The company plans to use the proceeds to help finance its $170m investment plan. Builder Ingevec is another Chilean debutant at the front of the list, with the market awaiting a rescheduling of the IPO that was to have taken place in August. Celfin is managing the Chiloe sale, while Larrain Vial has the Ingevec mandate.
Chilean Port Plans Rights Offer
Chilean port operator Puerto de Lirquen plans to raise up to $100m through a rights offering to existing shareholders. The measure is to be approved on September 15. The operator of the port near Concepcion controlled by the Matte group does not indicate the use of proceeds. Its shares trade infrequently, and were indicated at CLP600 ($1.29) as of August 22.
Peru, Colombia Nix Bolsa Merger
The Colombian and Peruvian stock exchanges have canceled plans to merge operations, indicating they need to focus first on improving the trading integration for Mercado Integrado Latinamericano (MILA). MILA, which began in May, created a cross-trading platform for the Chilean, Colombian and Peruvian bolsas, though it has been burdened initially with cross-border tax and regulatory problems. The project was launched amid much fanfare and expectations that it would create the second largest stock exchange in the region, behind Brazil’s Bovespa. But the Colombian and Peruvian exchanges postponed the merger in June after leftist candidate Ollanta Humala clinched the presidency and members of the incoming administration voiced doubts about such plans. The two say discussions could be picked up again in the future.