Category: Chile

Taking advantage of investor demand for high-quality Chilean credits, Banco Santander Chile has sold $1.2bn in 3 tranches, including the first-ever non-sovereign global CLP bond and a late-added floating-rate piece. Investors ponied up for more than $1.6bn in orders for each of the $500m 2015 dollar bonds and the $500m 2020 notes denominated in CLP and payable in dollars, representing the first-ever non-sovereign global CLP, and the first non-sovereign local currency bond from LatAm since a Banco de Credito del Peru issue in 2007, according to Dealogic. “There’s always going to be demand for a high-quality name funding in its own currency, and with an expectation for liquidity,” says a New York EM investor considering the deal. The dollar bond priced at 99.716, with a 3.750% coupon, to yield 3.813%, or UST plus 237.5bp, the tight end of 237.5bp-250bp guidance. A $500m equivalent 2020 peso tranche came at par with a 6.50% coupon, to yield the tight end of 6.50%-6.75% guidance. Finally, a $200m 2011 floating-rate note priced at Libor plus 100bp, in line with 100bp guidance. Total demand was $3.0bn-$3.5bn, according to bankers on the deal, who note the floating piece was reverse-inquiry driven and saw little oversubscription. Given the A+/Aa3 rating, the order book was dominated by high-grade accounts, the leads say. The dollar bond was heard bid up slightly in the gray late Wednesday. The 2015 dollar piece comes about 150bp-160bp back of the sovereign, which investors point out is in line with other EM A-rated bank spreads. One cites Korean Development Bank trading 180bp wide to Korea. The peso tranche comes 150bp-160bp wide to a 10-year global CLP benchmark issued by the sovereign in July, bankers on the deal say. The peso piece makes sense for the bank, investors say, as Chile’s local market, while large and liquid, prefers inflation-linked, and the trade is also likely cheaper on the swap. Santander probably saved 50bp-60bp versus dollars on the peso tranche before

Chile’s central bank is expected to hike its monetary policy rate today by 50bp, bringing it to 2.50%. In August the bank had also tightened by 50bp and since June has tightened the rate by 150bp. “Despite the breakneck pace of economic growth of recent months – which is likely to cause the output gap to close by the first half of next year – the central bank is unlikely to accelerate the pace of tightening (from 50 basis points) as inflation remains well behaved in part thanks to the strengthening of the real exchange rate,” Morgan Stanley says. Barclays, which also expects a 50bp hike today, sees the rate reaching 3.50% by the end of the year and 5.00% by Q2 2011.

Chilean copper miner Codelco has hired JPMorgan, Larrain Vial and Santander to explore alternatives for energy subsidiary E-CL, formerly known as Edelnor, including a the sale of a stake. A Codelco executive who confirms the information indicates that the company began looking for advisors in August and that the banks will make recommendations to the board as to whether or not a sale is appropriate at this time. The Chilean press has indicated that Codelco plans to sell its entire 40% stake in E-CL, but the executive says this has not been determined yet. Analysts believe the 40% stake to be valued at around $1bn. Codelco, the world’s largest copper miner, co-owns E-CL with France’s GDF Suez, which holds a 52.4% stake, in addition to a 7.6% free float.

Santander Chile is set to sell a benchmark size 2015 bond and a minimum $300m equivalent 2020 global peso bond, as soon as today, according to bankers on it. The issuer is out with UST plus 237.5bp-250.0bp official guidance on the dollar tranche. Investors, who expect the dollar issue at $500m, point out this is about 170bp wide of the sovereign, for a A+/Aa3 credit. A banker on the deal notes this is an appropriate level, as the bank’s Spanish parent is at about UST plus 240bp. There is no guidance on the peso tranche, which would be the first CLP-denominated cross-border issue for a non-sovereign, according to Dealogic. Deutsche Bank, JPMorgan and Santander are managing the transaction.

Chile’s Celulosa Arauco y Constitucion has raised $400m in 2021 bonds some 30bp through initial whispers. The pulp and paper company received $3bn in demand, according to bankers on the deal. The Baa2/BBB/BBB+ issue priced at 99.093 with a 5.000% coupon to yield 5.115%, or UST plus 245bp, inside 250bp-260bp guidance and original whispers of 275bp. “It’s fair value,” says a London-based EM investor looking at the deal, spotting Arauco’s existing 2019 at UST plus 235bp. “It will probably perform well – the hunt is on for investment grade assets,” he adds. A banker on the deal meanwhile pegged the 2019 at 242bp. Other investors note that in the current market, the 10bp difference between the 2019 and January 2021 is acceptable for a quality name that offers LatAm ex-Brazil – and also Chilean ex-Codelco – diversification. The bond traded up about half a point Tuesday afternoon, according to investors. JPMorgan and Santander managed the transaction, which follows a local UF5m ($214m) 10-year bond September 1. Brazilian comp Suzano is expected to sell a 2021 benchmark as soon as Thursday.

Bank of China will set up a China desk in Chile within the next year, following on from the opening of its desk in Peru in April, Wu Tianpeng, executive manager at the bank’s corporate banking (financial institutions) unit tells LatinFinance. He adds that Bank of China will then look to set up China desks in other LatAm countries, where it does not yet have a base, and says that senior management backs the move. Bank of China has a subsidiary in Brazil, but Tianpeng says setting up China desks is attractive. “Establishing a subsidiary can take between one and two years, but setting up a China desk can be done much quicker,” he says. Bank of China is looking to expand its presence in LatAm region, in line with its clients. It expects to see continued growth and development in the region, adds Tianpeng.

Wrapping up investors meetings Monday, Chilean paper producer Celulosa Arauco y Constitucion is heard talking UST plus 275bp area for a new 10-year bond of up to $400m, according to investors. The sale is expected as soon as today. JPMorgan and Santander are managing the transaction, rated Baa2/BBB/BBB+.

Santander Chile is seeking a 5-year bond of around $500m in size for a transaction expected as soon as this week, according to investors. The issuer is also heard considering the issuance of a global peso-denominated bond, as buysiders are inquiring about that option following the success of the Chilean sovereign’s own $500m equivalent europeso in July. The bank launched a roadshow last week in London, and was set to meet US investors this week. Deutsche Bank, JPMorgan and Santander are managing the tour. The A+/Aa3 bank sold $500m in 2012 floating-rate bonds in April through Deutsche and Santander, and then met Asian investors in May.

Chile’s Banco Bice has issued UF1m ($43m) in local bonds via a Dutch auction in a single tranche. The 25-year notes priced at 102.73 with a coupon of 3.75% to yield 3.60%, a 43bp spread over the BTU-20 benchmark, says a banker on the deal. The duration of the notes is 15.41 years, while that of the benchmark is 14.66. Total demand surpassed UF4m, the banker says. Bice’s brokerage unit managed the sale.

Chile-based construction company Salfacorp has issued UF2m ($86m) in local bonds via Dutch auction. The issue was done in 2 tranches. A UF1m 5-year priced at 98.65 with a coupon of 3.25% to yield 3.47%, for a 104bp spread over BCU-5. A UF1m 21-year (9.1-year duration) piece meanwhile priced at 99.56 with a coupon of 4.00% to yield 4.00%, an 80bp spread over BCU-20 (11-12-year duration) and 120bp over BCU-10 (8.0-8.5-year duration). Proceeds of the BBB+/A minus bonds will be used to refinance debt. Celfin led the sale.