Category: Chile

Chile’s Colbun has raised $500m, upsized from $400m, in its first dollar bond sale, pricing inside initial guidance. The power generator drew more than $2bn in orders, according to bankers on the sale. The BBB/BBB minus 2020 came at 98.973 with a 6.000% coupon to yield 6.139%, or UST plus 237.5bp, well inside 262.5bp area guidance. The bond was heard trading up 0.50-0.75 points in the gray Thursday afternoon. “It’s a first time issuer, but its an easy-to-follow company with strong shareholder support in a defensive market” says a participating EM investor. Despite the tightening, the buysider still calculated a tiny pickup, after adjusting for duration, to Endesa’s 2027 bond, which trades around 6.8%. A banker on the deal points to Colbun being in a defensive sector in a stable economy as driving demand and driving the upsize and tightening. About $250m of proceeds are expected to be used for cancelling outstanding debt and $150m to finance expansion, according to S&P. Citi and JPMorgan are managing the sale. Though this is the first cross-border issue for Colbun, the borrower has made extensive use of the bank and local bond markets. In 2008, it raised a $400m 5-year syndicated loan led by ABN, BBVA, Citi, Itau and Santander.

Price guidance for a new bond from Chile’s Colbun has been set at UST plus 262.5bp-area. The BBB/BBB minus power generator was set to finish its road show Wednesday pitching the $400m 2020, with pricing expected today. About $250m of proceeds are expected to be used for cancelling outstanding debt and $150m to finance expansion, according to S&P. Citi and JPMorgan are managing the sale. A sale would be the first cross-border bond from Colbun, according to Dealogic data, though it sold $81m in 2018 dollar notes on the local market in 2008. That same year, it raised a $400m 5-year syndicated loan led by ABN, BBVA, Citi, Itau and Santander, with JPMorgan among the participants.

Chile became the first South American country to join the OECD Monday, pending ratification from its parliament. “Chile’s acceptance for OECD membership marks international recognition of nearly two decades of democratic reform and sound economic policies. For the OECD, Chile’s membership is a major milestone in its mission to build a stronger, cleaner and fairer global economy,” says the OECD. The group also notes “increasingly close co-operation with Brazil,” which it says it is working with in the context of new membership by major economies. Mexico is the only other LatAm member.

Fitch has upgraded Chile-based Enersis and Endesa, both to BBB+ from BBB citing operational and financial improvements. The agency expects that the power generation company’s solid credit metrics will be maintained over the medium term. Fitch says Enersis’s credit profile continued to strengthen in 2009 as it increased its liquidity position and reduced its leverage as its cash generation benefited from a better production mix, lower generation costs and higher sales to the spot market. As of September 2009, Enersis’ consolidated cash in hand was $2.4bn, which is further enhanced by available committed credit lines of approximately $1.2m. This coupled with the expectation that Enersis will generate positive free cash flow more than adequately positions the company to satisfy its $1.3m in consolidated debt maturing in 2010. The assigned ratings are linked to Enersis ability to consistently generate meaningful levels of free cash flow while maintaining a relative stable Ebitda, a net debt to Ebitda ratio below 2.0x and a consistent liquidity profile in relation to upcoming scheduled maturities.

Chilean financial conglomerate Corpbanca has sold UF3m ($130m) in 3-year local bonds with a 3.40% coupon to yield 3.65%, or 108bp over government. The bonds are rated AA minus by Fitch. Proceeds of the self-led issue will be used to finance expansion plans. Corpbanca, previously known as Banco de Concepcion, claims to have a 7% share of Chile’s loan market and operates 107 branches.

Chilean power generator Colbun is set to begin marketing today a $400m 10-year bond. The high-grade issuer will begin in Boston and the Los Angeles today, visit New York and Los Angeles Tuesday, before finishing in London and New York Wednesday. In a report assigning a BBB minus rating, S&P says it expects $250m of proceeds to be used for cancelling outstanding debt and $150m to finance expansion. Citi and JPMorgan are managing the sale. A sale would be the first cross-border bond from Colbun, according to Dealogic data, though it sold $81m in 2018 dollar notes on the local market in 2008. That same year, it raised a $400m 5-year syndicated loan led by ABN, BBVA, Citi, Itau and Santander, with JPMorgan among the participants.

Canada’s Goldcorp has agreed to acquire a 70% stake in the Chilean El Morro copper and gold mine from peer New Gold. Before acquiring the stake, Goldcorp will lend $463m to New Gold so it can exercise a right of first refusal and purchase the stake from Xstrata. As Xstrata’s current 30% joint venture partner in El Morro, New Gold holds the right, which came into effect on October 12, when Barrick Gold exited. After New Gold has bought the stake from Xstrata, it will sell it to Goldcorp for $50m in cash. After the transaction closes, Goldcorp will then hold 70% of El Morro and New Gold 30%. Goldcorp’s financial advisors are GMP Securities and legal advisors are Cassels Brock & Blackwell. New Gold’s financial advisor is BMO Capital Markets and legally, it was helped by Lawson Lundell. El Morro is an advanced stage copper-gold project in north-central Chile. Goldcorp says it contains proven and probable reserves of 6.7m ounces of gold and 5.7bn pounds of copper. Goldcorp president Chuck Jeannes says El Morro is in “one of the best mining jurisdictions in South America.” Goldcorp has operations throughout the Americas and says its gold production is 100% unhedged.

Chilean president Michelle Bachelet has announced a $900m expansion to Santiago’s subway system, according to Dow Jones. The $900m investment will add another 15km and 12 stations to the existing system and will likely be operating toward the end of 2014, Bachelet says, according to the report. About 2.5m passengers ride every day on Santiago’s subway system, which began operating in 1975, says Dow Jones.

Empresas Copec, the Chilean fuel and forestry conglomerate, has priced UF7m ($290m) in bonds at 99.29 with a 4.00% coupon to yield 4.30%. The 21-year C series bonds have a duration of 13.94 years, with amortization starting in 2030, and are rated AA by Feller Rate and Fitch. IM Trust led the deal which priced Tuesday through Dutch auction. The C series was capped at UF10m from a 4-tranche deal that itself was for a maximum UF10m. Copec was also offering UF500 in 3.25% coupon 2014 bonds and CLP10m in 5.75% of 2014s. The issue was originally set to price December 17 after a roadshow December 9-11. Proceeds are earmarked mostly for investment project spending, with roughly 10% for debt refinancing, according to the prospectus. Copec owns Celulosa Arauco, the forestry company. Consolidated 2008 sales were $12.7bn, 70% from fuel, according to the issuer.