Category: Chile

Chile’s Corpbanca has closed a $167.5m 2-year loan and is considering issuing bonds in the second half. The loan through joint leads BNP, Citi, Commerzbank, Standard Chartered and Wachovia saw retail participation from ING, HSBC and BAC Florida. Pricing was on a ratings grid, out of the box at 95bp for BBB+. For an A minus rating, the spread falls to 87.5bp, rising to 112.5bp for BBB, and 137.5bp at BBB minus, say bankers. The average life is roughly 1.75 years. The transaction was expected to be for $150m, though bankers had said it could be upsized depending on demand. The deal was 30% oversubscribed, says a lead banker. “This went very smoothly, as would be expected for a Chilean, investment grade, well capitalized bank,” adds the banker. The loan was taken to diversify the bank’s source of funding, says John Fischer, head of investor relations at Corpbanca. The bank is also looking to issue bonds on international market in the second half of 2010. “We have a high concentrated of short term liabilities, with time deposits making up 60% of our assets,” says Fischer. “We want to finance with more long term assets, which is also why last year we did 2 bond issues. This is particularly important as in the past year we have increased our market share of the loans market by 15bp,” he adds. Corpbanca’s long-term goal is to increase its market share of loans by 20bp every year, adds Fischer. The bank is particularly looking to increase volume in mortgage loans. Of its loans portfolio 75% is commercial and 25% retail, though it is looking to increase the retail share to 30% in the medium to long term, says Fischer. He adds that Corpbanca’s market share last year was 7.25%, year-to-date it is 7.42% and that the bank hopes to end this year with 7.45%-7.50% market share.

Chile’s Banco Internacional issued UF750,000 ($31m) in 5-year bonds via Dutch auction. The notes priced at 101.77 with a coupon of 3.50% to yield 3.10%, a spread of 90bp over the BCU-5 benchmark. Proceeds will be used to finance expansion plans and long-term credit products. Euroamerica Corredores de Bolsa managed the sale.

Chile has been whispering UST plus low 100s on a new dollar bond and high 5%s yield on a global peso tranche, according to investors. The $1bn 2020 USD and $500m 2020 CLP bonds are expected to price today, following conclusion Wednesday of investor meetings in the US. Talk is in line with expectations of a deal coming inside Mexico and Brazil, though how much of a concession will be given by Chile – which has an illiquid curve, but is also the region’s highest quality credit – remains to be seen. Barclays expects a 15bp-20bp concession, on top of the 96bp spread between its 10 year CDS and UST. The shop spots fair value on the CLP portion at 5.82%. Citi, HSBC and JPMorgan are managing the sale, rated Aa3/A/A+ and Chile’s first since 2004.

S&P has given an A+ rating to Chile’s upcoming bond issue. The sovereign is pitching investors through Wednesday $1bn in USD bonds and a $500m debut in global pesos. Given the high ratings (A1/A/A+), DCM bankers away from the deal and analysts expect Chile’s first deal since 2004 pricing comfortably through regional low-yielders Brazil and Mexico. “The sovereign ratings on Chile – the highest in Latin America – reflect a strong political consensus on key economic policies, the credibility of its institutions, and a track record of stable economic growth,” S&P says, specifically highlighting countercyclical measures during the 2008-2009 global crisis. The shop finds that neither the credit crisis nor the earthquake will hinder Chile’s growth, which it expects at 4.5% in 2010 and 5.0% in 2011, following a contraction of 1.5% in 2009. Citi, HSBC and JPMorgan are managing the transaction, expected to launch after the roadshow.

Chile’s Banco Internacional plans to issue UF750,000 ($31m) in 5-year bonds tomorrow via Dutch auction. The notes will pay a coupon of 3.5%. Proceeds will be used to finance expansion plans and long-term credit products. Euroamerica Corredores de Bolsa will manage the sale.

A new Chilean bond expected next week could come at a tight price, RBS says in a report, possibly shifting the curve of the country’s corporates. “Though the marketing process is still early, given the scarcity of similar assets, we believe the deal could come surprisingly rich, which then could reprice the market of Chilean corporates,” the shop says in a report. Should this happen, RBS highlights Colbun’s 2020 bond, trading to yield 5.35%, as a good play given its strong regulatory framework and place in an industry benefitting from the earthquake rebuilding effort. Arauco’s 2019s, at 5.04%, should benefit, given the developer’s industry leading position. “We think this will be a low-yielding issue as Chile is the highest rated name in the region at Aa3/A+/A and 5-year CDS is trading at a low 88bp,” says Bulltick in another report. Chile announced last week a roadshow beginning today and finishing Wednesday to pitch its first issue since 2004 – expected to be $1bn in 2020 bonds and $500m in 2020 global peso-denominated notes. Citi, HSBC and JPMorgan are the leads.

Chile plans to meet US bond investors next week, ahead of a much-anticipated $1.5bn debt sale. It will begin in LA on Monday and hit Boston before finishing Wednesday in New York. The sovereign, raising funds to help with budgetary needs due to earthquake reparations, plans global 2020 bonds denominated in both dollars and pesos, according to regulatory documents. Its finance minister has flagged a sale of $1bn in USD bonds and a $500m debut in global pesos. Citi, HSBC and JPMorgan are leading the deal, Chile’s first in dollar markets since 2004. Chile is rated A1/A/A+.

Chilean asset management firm LarrainVial says it has been granted an AMP2 rating by S&P, which it claims makes it the first Chilean company of its kind to obtain an international credit rating. S&P says the grade reflects a good competitive position with an adequate mix of products and clients, suitable operating procedures, sound managerial team, well-defined company strategy and investment objectives for each fund, as well as its operating in an environment of low political and regulatory risk. LarrainVial has more than $2.35bn in assets under management.

If Chile follows through with plans to issue a 10-year bond, the new issue would boost corporate access to international markets, says finance minister Felipe Larrian. “Absolutely, there would be a benefit to establishing a benchmark.” he told reporters in New York Friday. “In Chile there is not a benchmark for private sector bonds with the necessary liquidity and maturity.” He does not comment on the timing of a bond sale, expected by the market at some time in H2, noting that Chile would get competitive rates even if it were to issue later in 2010. “The markets are differentiating very significantly between EM economies that have responsible policies and are taking steps to have adequate fiscal policies,” Larrain says. He notes that Chile has lower spreads than Eurozone countries such as Spain, Portugal, Ireland and Greece. Chile said in April it is considering the sale $500m via a debut peso-denominated global bond issue, as well as $1bn in 10-year dollar bonds. Citi, HSBC and JPMorgan are heard as the leads. Larrain declines to confirm or deny the mandate. Larrain also says the government plans to send a new law to congress in the first half of next year to simplify and standardize the legal framework governing funds. This includes mutual funds, funds investing foreign capital, overseas venture capital and home savings. The changes should boost their investment abilities and help with Chile’s “export” of financial services, Larrain says.

In line with market expectations, Chile’s central bank has tightened the monetary policy rate by 50bp to 1.50%. The bank says the outlook for the local economy is favorable despite volatility in financial markets, caused by uncertainty in Europe. It also says copper and oil prices remain elevated. Bulltick, which had predicted a 50bp hike, says inflation has been relatively tame, rising 0.36% month-over-month in May and staying flat in June. Chile began the tightening process June 15 with a 50bp hike to 1.00%. Celfin says economic recovery in Chile is moving rapidly, both on the supply and demand side with expectations also improving. It project the central bank will lift the rate to 3.00% by the end of the year.