Category: Chile

Two of Chile’s larger corporates are expected to price domestic bonds this week, according to analysts and offering documents. Bottler Coca-Cola Polar is planning to issue up to UF2.5m ($160m) Wednesday, in as many as 3 series. A 2017 UF-denominated tranche with a 3-year grace period which begins amortizing in 2014 pays 3.0%. A similar peso-denominated piece comes with a coupon of 6.5%. A 2031 UF tranche with a 3-year grace period and amortization starting in 2021 meanwhile pays 4.0%. IM Trust and Penta Corredores de Bolsa are managing the transaction, rated AA minus on a national scale. Pulp and paper producer Celulosa Arauco plans to issue up to UF5m ($211m) in local 2018 and 2020 bonds, both paying 3.25% coupons. BBVA and Corpbanca are managing the sale, expected to happen Thursday.

Several Chilean corporates are among cross-border bond issuers lining up for the traditional September-October LatAm issuance spree. Banco del Estado is heard having mandated Deutsche Bank and JPMorgan for a new deal, while state-owned miner Codelco is picking banks for a new benchmark-sized transaction. Others rumored to be considering issuance are pulp producer CMPC, retailer Falabella and Telefonica Moviles Chile. Issuance from the latter 2 would mark international debuts. “Liquidity available [internationally] is very strong, as are the reputations of Chilean issuers, and the [new $1bn 2020] government bond has set a nice benchmark,” Diego Torres, corporate debt analyst at Santiago-based Munita, Cruzat y Claro in Santiago, tells LatinFinance. Such conditions set issuers up for low yields, he explains. The domestic market, where depth and favorable conditions have long kept many top issuers at home, are still strong, he says. However, scale and cheaper hedging costs due to improved FX rates may push some to international markets. Falabella is one looking at both options, bankers say. “Diversity away from the Mexican and Brazilian issuers would be very good for us,” says a West Coast-based EM investor. He anticipates at least 4 issuers from Chile by the end of the year. Chemical producer SQM, Banco Santander Chile, and energy companies ENAP and Colbun have issued dollar bonds this year, raising $1.25bn.

Turner International, a unit of US-based media conglomerate Time Warner, has agreed to acquire television channel Chilevision from Bancard, an investment firm controlled by Chilean president Sebastian Pinera. A price was not disclosed, but bankers in Chile estimate the buyer may have paid around $140m. Chilevision went back on the auction block after private equity firm Linzor Capital, which operates in Chile and Argentina, opted not to go through with a $130m offer in May. LarrainVial advised Bancard, while Barros & Errazuriz provided legal advice, Bancard says. Citi was the buyer’s financial advisor and Cariola, Diez, Perez-Cotapos gave legal advice. The deal is part of Pinera’s campaign promises to sell certain business interests, including a stake in airline LAN.

Chilean financial services company Factorline has issued CLP20bn ($40m) in local bonds due 2015. The notes priced at 100.43 with a 7.00% coupon, to yield 6.88%, or 129bp over the government benchmark. The company does not indicate how it will use proceeds from the deal, rated A on a national scale. BBVA managed the sale.

Chile’s Celulosa Arauco says it is planning to issue up to UF5m ($211m) in local bonds in 2 pieces. The first tranche is due in 2018 and the second in 2020. Each series is expected to have a 3.25% coupon. The company has not said which banks will lead the sale or what it will use proceeds for.

After local press reports indicated Chilean copper giant Codelco would sell its 40% stake in E-CL, the power generator formerly known as Edelnor, the miner informed the local securities regulator that no decision has yet been made. “Codelco is evaluating different strategies . . . [and] has contacted international and local investment banks to advise Codelco on, among other things, the convenience and opportunity of a sale and the amount of shares it would sell,” the company says. Celfin says the 40% stake is worth $1bn. Celfin and LarrainVial are said to be competing for the mandate to sell it, though both decline to comment on the matter. E-CL shares closed at CLP1,239.60, up 2.52%.

Itau Chile says it plans to issue UF1.5m ($63m) in local 22-year bonds. The bonds, rated AA minus, will pay a 4% coupon, the bank says, without disclosing what proceeds will be used for. The bank’s brokerage unit will handle the sale.

Chile-based chemical company SQM saw its shares soar 6.59% to close at CLP21,364 the day one of its major shareholders, US-based Potash Corp, rejected an unsolicited offer from mining giant BHP Billiton, calling it “grossly inadequate.” BHP had offered to acquire Potash, which holds a 32% stake in SQM, for about $39bn or $130 per share. Potash shares closed at $143.17. Chilean analysts who cover SQM believe BHP is likely to sweeten the offer for Potash, but they do not believe a global race to acquire potash fertilizer assets will mean someone will bid for SQM. “It is possible that other companies that are investing in fertilizer assets, such as Rio Tinto and Vale, may make an offer for Potash, but I don’t think there will be offers for SQM,” says equity analyst Cesar Perez of Celfin. He notes that SQM’s founder Julio Ponce, who holds a 32% stake in the company will not sell. Rodrigo Mujica, who covers SQM’s stock for Chilean brokerage BCI, agrees. “Ponce has grown the company from scratch and I doubt he would sell,” he explains.

Santander Chile has received a $175m syndicated loan from 8 banks, including 3 Taiwanese participants. “We went to Asia and specifically to Taiwan, because we knew the potential liquidity there but did not have much of a relationship, so saw an opportunity,” says a spokesperson for Santander Chile. “This was a very good first step and based on the success of the deal we will look to increase relations with banks from Taiwan in the future.” The deal was upsized from $125m originally planned. This was despite early concerns about the bank’s connection to Spanish risk because of the Southern European sovereign debt crisis. “Participants did ask about this at the start, but after the bank meetings they were convinced by the group’s strong financials,” says the spokesperson. Pricing for the18-month loan was Libor+80bp for Aa3 risk. The loan was syndicated through Standard Chartered, who was lead arranger as well as bookrunner and took a $45m ticket. Mizuho, Banco de Credito del Peru and Malayan Banking Berhad were MLAs, committing $35m, $30m and $25m respectively. Bank of Taiwan was an arranger at $15m, and Taiwan’s Mega International Commercial Bank as well as Banca Monte dei Paschi di Siena came in as co-arrangers with $10m each. Land Bank of Taiwan participated with a $5m commitment. Proceeds from the loan will be used for general corporate purposes, in particular to finance lending, according to a statement from the borrower.