Shopping the DCM banks for bookrunners since August, Codelco has revealed its board approved in July the issuance of up to $1.8bn in debt at maturities up to 30 years. The state-owned copper producer is heard considering seriously a dollar bond, though the approval also contemplates domestic bonds and bank loans. Codelco says it did not reveal the authorization until Friday due to “pending negotiations with third parties.” Conditions for a dollar bond might prove too good to resist with UST still very low, the Chilean sovereign setting a $1bn 2020 benchmark in July to yield 3.890%, and Chilean banks and corporates being generally well-received this year. The A1/A miner is a popular though very infrequent issuer, having last sold $600m in 7.5% 2019s in January 2009 through HSBC and JPMorgan, to a $1.25bn order book. Citi, HSBC and JPMorgan, which led the Chile sovereign deal, are favored to run the copper producer’s bond.
Category: Chile
Estado Gets $500m Debut
Chile’s BancoEstado has raised $500m in its debut dollar bond sale, with investors putting up about $4bn in orders, according to a banker on the deal. The state-owned institution priced the 2020 at 99.240 with a 4.125% coupon to yield 4.219%, or UST plus 170bp, the tight end of 170bp-175bp guidance. This comes about 75bp back of the UST plus 95bp level of the Chilean sovereign, an investor says. Deutsche Bank and JPMorgan managed the Aa3/A+ deal.
HydroChile Seeks Financing
HydroChile is looking for a $120m 14 year club, through Banco Espirito Santo, to help fund a $220m project. Credit Agricole, BES and WestLB are MLAs on the deal. HydroChile was founded in 2007 and develops run-of-river hydroelectric power projects with capacities ranging from 10MW to 50MW.
Enersis and Endesa on Upgrade Track
Moody’s says it has placed the Baa3 ratings of Chile-based electricity companies Enersa and Endesa, both units of Italy’s Enel, under review for possible upgrade. It cites improved macroeconomic factors and lessened concern for the parent company’s dividend policy. “While the parent has publicly committed to reduce leverage in terms of net consolidated debt, we observe that the dividend policy affecting Enersis and Endesa Chile operations has not changed materially within the past year,” Moody’s says. “We also believe that the existence of the minority ownership structure reduces the financial rationale for Enel to greatly increase distributions from its LatAm operations as this would result in a substantial cash outflow to the minority shareholders that would deteriorate it’s consolidated net debt position,” it adds.
Corpbanca In Talks With Banco do Brasil
Chile financial holding company Corp Group Interhold says it has held preliminary talks to sell a minority stake of no more than 10% to Banco do Brasil via a capital increase. The Chilean bank says no agreement has been reached. Chilean research shop Celfin says that it is surprised that Banco do Brasil would enter the company through a capital increase and that it would go for so small a stake. “To make a successful and profitable entrance into the Chilean market, acquisition of control would be necessary,” it says. Celfin estimates that as of July, Corpbanca had $1bn book value and annualized return on average assets of 20%. Corpbanca shares were down 4.44% Wednesday, closing at CLP7,300.
BCI Dumps Dollars For Pesos
Despite what dollar bond bankers are calling exceptionally attractive market conditions for borrowers, at least one issuer is finding better terms at home. Chile’s Banco de Credito e Inversiones (BCI) has opted for a local 10-year UF-denominated bond issue after a USD issue was cancelled late last week, according to bankers away from the deal. BCI originally intended to go for a 5-year in USD, but a banker who worked on the deal said the issuer recoiled at pricing of 275bp over UST. It was whispering mid 200bp last week. “That is too expensive. Santander, the largest bank in Chile, issued recently at 237bp over Treasury,” says a Chile-based banker. BCI, rated A1/A minus, is the third largest bank in Chile. Santander is rated A+/Aa3. While Santander has $41bn equivalent in assets, BCI has $27bn equivalent. The local bond, likely to be managed by BCI’s own brokerage, could come out in as little as 10 days, a Chile-based banker says. He adds that the bank could issue up to $200m equivalent in UF paying between 40-50bp over BCU-10, which closed Monday at 2.88%. An investor says the Chilean market is comparatively deep, thanks to participation by pension funds, which, along with the advantages of not having to swap dollars for pesos, likely encouraged BCI to stay home. But a banker close to the deal expressed skepticism the issuer would succeed in finding cheaper financing in local markets, even after the swap. BNP Paribas and JPMorgan were managing the USD issue.
Correction: BCI Chooses 2015
A September 24 Daily Brief entitled “BCI Chooses 2015” incorrectly states the rating of Chilean bank BCI. The issuer is rated A1/A minus.
Andean Banks Set to Meet Buyside
Chile’s Banco del Estado and Peru’s BBVA Continental are set to meet investors next week, hoping to get the same warm reception that greeted recent new bonds from compatriots including BCP and Santander Chile. The Aa3 Chilean bank is set to visit the US and London buyside Monday through Wednesday. Deutsche and JPMorgan are managing the meetings, to which no deal is yet attached. Continental will also meet investors next week, through BBVA and Credit Suisse. Peru’s Interbank is also on the road next week, and Chile’s BCI is expected to price a new 2015 soon.
BCI Chooses 2015
Chile’s Banco de Credito e Inversiones (BCI) is opting for a 5-year issue, investors say, and whispering mid 200bp pricing. The bank was set to finish investor meetings Thursday. It would be a dollar debut for BBB/BBB minus rated BCI. BNP Paribas and JPMorgan are managing.
Chile Says Codelco Not for Sale, Yet
While his government plans the sale of certain state controlled assets to help with earthquake recovery costs, Chilean president Sebastian Pinera says a piece of Codelco is not for sale. “Codelco is different – it is part of our constitution. We need a broad agreement in Chilean society and we don’t have that yet,” he says. A 20% privatization of Codelco was once thought possible. Codelco recently hired JPMorgan, Larrain Vial and Santander to explore alternatives for energy subsidiary E-CL, formerly known as Edelnor. Separately, Pinera says he does not expect Chile to be borrowing too much internationally, despite the firm reception to its recent bond offer. “We will not be an active borrower in the international markets,” he says. When planning the recent $1.5bn sovereign sale, its first in 6 years, officials had said Chile wanted to become a more regular borrower. Pinera spoke at an investor presentation in New York organized by the Council of the Americas.