Category: Chile

Chile’s Sociedad Quimica y Minera is talking UST plus 187.5bp area for a new 2020 bond, expected to price today. The BBB fertilizer and chemical producer should raise $250m via its first dollar bond issue in 4 years. Deutsche Bank and JPMorgan are managing the sale.

EM corporate debt analyst Diego Torres has left ING in New York to join Santiago-based Munita, Cruzat y Claro. Torres, who is Chilean, is expected to start later this week, partner Alfredo Harz tells LatinFinance, and will become the financial services firm’s director of corporate fixed-income research. “We are expanding our research group,” Harz says. The brokerage, advisory and asset management shop mostly serves Chilean clients. It also operates an office in Peru, he adds. Munita manages more than $1bn.

Chile’s Banco Internacional has registered with the local financial superintendent a UF750,000 ($30.7m) 2031 subordinated bond issue. The issue will be done in a single tranche paying 4.5%, the company says. Celfin is leading the A minus rated issue.

Chile president Sebastian Pinera said during an event at Washington DC’s Brookings Institution that the government will raise as much as $10bn to finance the reconstruction of the country, which was hit by a strong earthquake February 27. Celfin Capital economist Cesar Perez expects the funding mix to be a combination of tax increases, repatriation of some of savings held abroad, debt issuance in international markets, modifications to the 2010 budget to redirect money to the hardest-hit regions (Bio Bio and Maule), and sales of assets. In fact, Pinera said that he may consider selling a stake in Edelnor, the energy unit of state-owned copper producer Codelco. Perez believes the unit could go for $875m.

Chile water utility Aguas Andinas plans to issue UF4m ($161.8m) in local bonds April 15, making it the first pure corporate to issue locally this year. The AA+ rated bonds will be issued in 3 tranches due in 6.5, 9.5 and 21.0 years, the company says. The 6.5-year bonds will have a 3.0% coupon, the 9.5-year bonds will have a 4.0% coupon and the 21.0-year notes will pay 4.4%. Proceeds will finance the company’s investment plans. Larrain Vial and BBVA are handling the sale.

A $750m financing for Minera Los Pelambres, a unit of Chile copper miner Antofagasta Minerals, has closed. Of the total, Canada’s EDC, Germany’s KfW, and commercial banks Bank of Tokyo, BBVA, Calyon, the Bank of Nova Scotia, BancoEstado and Santander are financing $505m. Another $245m comes from JBIC. The funds will go to finance the expansion of Los Pelambres to 175,000 tons-per-day from 145,000. White & Case was Los Pelambres’ legal advisor. Pelambres is 60% owned by Antofagasta alongside Nippon Mining & Metals, Mitsubishi, Marubeni and Mitsui.

Chile is expected shortly to sell its first overseas bond in more than 6 years. Following an announcement last week by president Sebastian Pinera that the A1/A+/A sovereign plans a 10-year bond deal to help cover earthquake reconstruction costs, DCM bankers say the republic is getting pitched with a broad array of options. A new 10-year bond from Chile would likely price at US Treasuries plus 115bp-130bp, Paul Biszko, EM strategist at RBC Capital Markets, tells LatinFinance. This is about 15bp inside Brazil and Bizko estimates a $1bn-$2bn size. “Anything is possible. We have yet to get any real clarity on how they will fund the reconstruction,” Biszko says. He notes that there could be additional taps later in the year, and that 5, 20 and 30-year tenors would also be possible. DCM bankers agree, saying several billion at various tenors is within the sovereign’s grasp. A new issue would aid the Chilean corporate curve, they add. “It’s Chile. They can do whatever they want,” says one banker, noting that the high rating and scarcity value would make it a must-have for EM-dedicated and high-grade accounts. The government can also turn to a $12bn sovereign wealth fund, the local debt markets and multilateral funding to meet reconstruction needs, estimated by RBS to be $9.3bn. Given the long hiatus, bankers covering the credit do not rule out a roadshow to tell the story of the new administration, although the high-grade issuer could launch without. Chile’s last international bond was a $600m floating-rate bond priced with a coupon of Libor plus 40bp, sold in 2004 and due in 2008, through Citi and JPMorgan.

Sociedad Quimica y Minera de Chile is preparing to pitch investors with a new 2020 bond. The fertilizer and chemical producer is expected to raise $250m, according to an S&P report assigning a BBB mark. A deal would be SQM’s first dollar outing in 4 years. SQM is scheduled to meet investors in the US and Europe Monday and Tuesday. Deutsche Bank and JPMorgan are managing the sale. “Proceeds of the debt offering will be used to refinance existing SQM debt and will not impact the firm’s total leverage,” Moody’s says in a report assigning a Baa1. SQM’s last dollar bond was a $200m 2016 sold in 2006 through Deutsche Bank. It is a regular in Chile’s local DCM, with its last transaction raising $147m equivalent from the sale of 5-year peso and UF bonds in May 2009.

Chile’s banking system can handle losses generated by the recent earthquake without compromising capitalization, Moody’s says. “Given the heightened challenges and potential for asset quality stress on banks, we have revised our scenario estimates to include further stress on the loan portfolios exposed to the affected regions,” the agency says. “While the full effects of Chile’s earthquake on the banks’ asset quality and earnings are still being determined, our preliminary analysis shows that higher-than-expected impairments could be fairly contained relative to the banking system’s present capitalization and reserve position,” Moody’s says, adding that realized losses could still be substantial.

Japan eximbank JBIC says it will co-finance with the Bank of Tokyo-Mitsubishi UFJ a $497m USD-denominated project finance loan for P&M Drilling International, a company controlled by Petrobras and Mitsui. The loan will finance the ultra-deepwater oil drillship project in Brazilian and overseas coastal waters, JBIC says. It adds that P&M will build and own an ultra-deepwater drilling rig and provide drilling service for 20 years through Transocean Group, the world’s largest deepwater drilling rig operator. JBIC does not say what the loan’s maturity or interest rate is.