Rodrigo Azocar Hidalgo, the CEO of Chilean national oil company, Empresa Nacional del Petrolio (Enap), is stepping down and will be replaced by Ricardo Cruzat Ochagavia at the end of July. Cruzat was CEO of Transnet from 2008 to 2011. In June, the state-owned company was heard seeking a $500m loan via 3 and 5 year tenors.
Category: Chile
Posted inDaily Brief
Issuers Prep Bonds in Volatile Market
Close to $2.5bn in new LatAm bond supply is sitting in the immediate pipeline, but whether much of that sees the light of day will depend on events in the broader markets, say bankers. After a brief spurt of issuance earlier this month, activity was reduced to a trickle last week with just the Province of Buenos Aires raising $250m through a retap of its 2015s, but a failure to reach a consensus on pricing forced other borrowers to either extend deadlines or indefinitely postpone deals. Worries over European and US debt problems are threatening to close windows as the buyside seeks extra premiums to compensate for increased risks. More bad news from the US and Europe this week could spoil the fun for LatAm issuers preparing to issue. These include Argentine oil company YPF, Guatemala’s Banco Industrial, oil services credit Quieroz Galvao, sugar and ethanol concern Usina Vista Alegre and the Dominican Republic. This comes as several companies carry out liability management operations involving the issuance of new bonds. Chile’s AES Gener, for instance, is looking to sell a new 2021 as part of its exchange and tender, while Argentine utility Transener wants to do the same. This doesn’t include new names that are also heard plotting bond sales such as Argentina’s Grupo ODS, which is thought to have mandated Credit Suisse for a $150m 2018. If market conditions stabilize YPF could be the first off the block with an up to $300m 8-year, 7-year average bond (Ba2/BB minus). The subscription period has now been extended to July 22. The Argentine blue-chip name wants to push out a marquee trade, but it may have to show some flexibility on pricing versus comp Pan American Energy. “[YPF’s postponement] is a precautionary measure on the issuer’s part,” says one trader Friday. “Markets have stabilized post the Province of Buenos Aires tap so I would expect them to put out guidance Monday sometime, if they can overcome their pride to price flat to Pan American Energy.” On Friday PA
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Celulosa Arauco Shuffles Leadership
Celulosa Arauco has named Cristian Infante as CEO. He was previously corporate management and development director, and the top job will be his fourth at the Chilean pulp and paper producer since joining in 1996. Infante replaces Matias Domeyko, who moves to the newly created role of executive vice president, responsible for areas including Arauco’s strategic planning and international expansion. Domeyko had been CEO since 2005, and had previously been CFO.
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Chile Holds Rates Steady
Chile’s central bank held its rate steady at 5.25% Thursday. The decision is the first pause for the bank in 6 months, having raised its rate at every meeting since January, with 475bp in cumulative hikes this cycle, according to Goldman Sachs. The shop still expects to see the rate reach as high as 6.00% by the end of the year. RBS cites favorable inflation data in June and ongoing concerns about weaker domestic demand in the second half of the year as motives for the pause.
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Chile Set for Water Sale
Chile’s Corporacion de Fomento de la Produccion (Corfo) is scheduled to auction and price today shares in water utilities Essbio and Essval, a follow-on transaction that could raise as much as $1bn equivalent. Following the $979m sale last month of nearly all of its stake in water utility Aguas Andinas, the government entity is now ready to offload 24.4% of Esval and 38.4% of Essbio, as the Chilean government proceeds with an asset sale plan to help with budgetary needs created by last year’s earthquake. Corfo plans to sell 3.65trn of Esval shares and 10.2bn of Essbio shares. With the respective floor prices set at CLP0.03 and CLP15.18, the total sale would raise a minimum CLP264.3bn ($571.3m). However, the relative illiquidity of the two companies’ shares – Essbio has a 5.4% free float and Esval less than 1% – makes estimating the final price and size difficult. In fact, bankers expect a deal under $1bn equivalent. Corfo is set to keep a 5.0% position in each company, both of which are controlled by the Ontario Teachers’ Pension Plan. Banchile, BAML and IM Trust are leads, the same trio that handled Aguas Andinas.
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Chile Expected to Pause Rate Hikes
Chile’s central bank is widely expected to keep its rate steady at 5.25% today. Goldman Sachs, meanwhile, also sees the central bank pausing now that it is no longer expected to miss its inflation target for 2011 despite an increase in fuel-energy prices. Nomura sees the rate reaching 5.50% in the next 3 months.
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Chile’s BCI Taps Mexican Market
Chile’s Banco de Credito e Inversiones (BCI) has issued MXP2bn ($170m) through a 5-year floater, becoming the second-ever Chilean borrower to tap the Mexican market. This follows Chilean miner Molymet, which has also sold bonds to Mexican investors. The deal priced at TIIE+40bp and was 1.23x oversubscribed, says a banker familiar with the transaction. The bonds were bought by a mix of private banks, mutual funds, investment funds, insurance funds and bank treasuries. Banco de Credito, rated AAA on a national scale was brought to market by HSBC with proceeds going towards general corporate purposes. BCI follows Chilean mining company Molymet, which has mining operations in Mexico and has done three MXP bond issuances. The last was in April, for MXP 1.5bn in 1.5-year bonds priced at TIIE +55bp. BCI tried to go outside Chile for funds for the first time in September, when plans for a 5-year USD were derailed by pricing concerns and instead it elected to raise 10-year funds locally.
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Metminco Options Chilean Copper Project
Metminco, an Australian mining company, has entered into an option agreement to acquire the La Piedra copper and molybdenum project for $30.5m in Chile. Under the terms of agreement, the company has agreed to pay $350,000 on signing the agreement, $350,000 per annum in advance for two years to June 30, 2013, $1m on or before June 30, 2014, and $28m in cash, or $14m in cash and $14m in shares on or before June 30, 2015. The company has an option to terminate the agreement at any time before June 30, 2015.
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Agrosuper Eyes Local Debt
Chilean food products company Agrosuper is indicating that it may raise up to $400m equivalent in the local bond markets during 2H. This comes after it established a program that allows it to sell up to UF8.5m ($403m) in 10 or 30-year bonds. Proceeds would be used to repay debt and for expansion. It has not yet indicated whether banks have been mandated, and finance officials could not be reached for comment. Agrosuper is actively looking for capital in 2011 as it ramps up export capacity, and is also planning an IPO this year through Banchile and LarrainVial. Agrosuper specializes in ham, poultry and salmon, and has operations in Italy, China, Japan, Mexico and South Africa.
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CAP Plans Bond Buyback
Chilean steelmaker Cap plans to buy back any and all of its $200m of outstanding 7.375% 2036 bonds, The purchase price will be equal to the present value of $1,000 in principal, using the July 19 reference yield on the 4 3/8% UST due May 15 2041 plus a fixed spread of 220bp. CAP expects settlement to take place on July 22. The offer expires at 5:00pm New York City time on July 19. Citi is acting as dealer manager. On Friday the bonds were trading at a wide bid-offer of 105.5-107.00, according to a trader. The 2036s were originally sold in 2006 through Citi and HSBC and priced at 99.761 to yield 7.395% or 250bp over. The BBB minus rated CAP recently extended a 3-year loan into a 5-year facility, upsizing to $200m from an original $150m.