Category: Chile

Santander Chile reigned in pricing on a $500m bond, locking in UST+157bp well inside initial whispers of 175bp area and tight to 160bp area guidance. Demand for the issuer’s first sale in 4 years reached about $2bn, according to bankers managing it. The bank priced the 2012 bond at 99.855 with a 2.875% coupon to yield 2.926%, or UST plus 157bp. The Aa3/A+ deal was heard trading at flat to up 0.125 points in the gray Monday afternoon. Despite the tightening, investors say there was still some incentive to participate. “There is a pickup relative to some AA minus level comparables,” says a New York-based EM investor, offering Nordea as an example. The Swedish bank rated AA minus sold $500m in 3-year bonds last week to yield UST+120bp, as part of a $2bn sale. Santander Chile’s existing dollar bonds are illiquid, investors say, and less useful as comps. Scarcity value for the financial sector may have also helped. The issuer chose the 3-year maturity as it was a good match for its funding needs and the most attractive point on the curve for swapping into CLP, says a banker on the deal. Deutsche Bank, JPMorgan and Santander managed the sale. Proceeds from the bond issue are earmarked for general corporate purposes. Largely able to fund itself in the domestic market, Santander Chile’s last dollar foray was in 2004, when it issued $400m in a 2009 at Libor+35bp and $300m in a 5.375% of 2014 via Deutsche and Santander.

Chilean power distributor Chilquinta has sold bonds worth UF6.5m ($257.2m) in 2 tranches, it says in a filing with the local exchange. The company did UF4.7m ($185.9m) in 5-year bonds at 99.69% with a 2.75% coupon to yield 4.27%. It also sold UF1.8m ($71.2m) in 21-year bonds at 98.37% with a 4.25% coupon to yield 3.11%. Proceeds will be used to cut debt and reduce exposure to foreign exchange rates. Chilquinta’s debt amounts to $224m, of which $200m is due in 2011 and the rest also short term, says IM Trust, which managed the issue. Fitch and Humphreys rate both tranches AA on a national scale. Chilquinta is 50% owned by AEI and 50% by Sempra Energy.

Chile investment bank Celfin Capital, which in September had offered about $323m to acquire a 20% stake in internet and cable company VTR GlobalCom from Cristalerias de Chile, is facing a rival bid from US-based Liberty Global. The latter is offering $260m in cash or stocks for the stake, according to a Chilean regulatory filing. The filing also states that because of a previous agreement between Cristalerias and Liberty, Liberty has the right of first refusal for the stake. Celfin’s offer expires today and Liberty’s on November 13.

Banco de Credito del Peru has sold $106m equivalent in floating-rate bonds on the Chilean market, marking the second-ever “huaso” notes issue. The Peruvian bank placed UF2.7m ($106m) in 2014 bonds, priced at 97.92 with a 3.50% coupon to yield 3.97%, or 140bp wide to corresponding government bonds, according to a banker managing the sale. BCP decided not to sell a peso-denominated tranche, which bankers say was a decision made ahead of time, due to a preference shown by investors for UF. They add that swapping back to dollars is easier with a single tranche. The yield is equal to about 5.4% in dollars, according to a banker on the deal. Private pension fund managers, mutual funds, brokerages and banks were among the largest buyers. Larrain Vial and BCI managed the sale, rated A/AA- on a national scale. The deal comes from BCP’s $300m equivalent shelf filed earlier this year. America Movil opened the market for foreigners in April with UF4m ($145m) in 3.00% coupon 2014 bonds on Chile’s domestic market yielding 3.31%, or 141bp over the government, on demand of around UF6.4m. It also decided to issue only in UF in its sale, managed by Banchile-Citi. Chilean bankers say more foreign issuers may be on the way, with pitches out to potential borrowers in Mexico, Peru, Colombia and Brazil. The ideal candidate for this type of transaction is an investment grade corporate that leads its sector, say bankers.

Chilean Wine Producer Vina Santa Rita has sold $70m equivalent in floating-rate bonds on the domestic market. The UF1.75m ($70m) issue of 21-year bonds priced at 100.08 with a 4.40% coupon to yield 4.39%. Covenants hold the issuer to 1.30x leverage and 2.75x interest coverage. Banchile managed the sale, rated AA/A+. Santa Rita aims to refinance debt and fund expansion with proceeds. The borrower is Chile’s third largest winery, with 30% market share, according to the company’s prospectus.

Chile’s Empresas CMPC has sold $500m in 2019 bonds on the back of about $1.25bn in demand. The issue priced at 99.117 with a 6.125% coupon to yield 6.240%, or UST plus 275bp, the tight end of 275.0bp-287.5bp guidance. “This was a volatile environment, though the [US] GDP numbers gave the markets a bit of a boost,” says a banker on the deal, who notes investment grade credits are having an easier time dealing with the current market conditions, characterized by choppy equity and FX movements, than recent high-yield visitors. BNP, JPMorgan and Santander managed the sale, rated Baa2/BBB+/BBB+. Proceeds will help finance the $1.43bn purchase of the Guaiba mill from Brazil’s Aracruz. The company also aims to place 20m new shares at around $25 each to raise another $500m for the purchase. The remaining $430m will come from the company’s own cash. CMPC agreed in September to buy the Guaiba unit in southern Brazil, which would make CMPC the world’s second-biggest pulp producer.

Chile’s CorpGroup Vida has sold UF5.7m ($225m) in inflation-linked domestic bonds on the domestic market. The insurer, under the same parent as CorpBanca, sold UF2.5m in 7-year bonds at 97.87 with a 3.20% coupon to yield 3.75%, and UF3.2m in 21-year bonds at 98.44 with a 4.50% coupon to yield 4.64%. The 7-year bond features a 2-year grace period and the 21-year a 10-year grace period. Celfin managed the sale, rated A/A+ on a national scale. The insurer owned by conglomerate Grupo Saieh has not yet indicated the transaction date. Proceeds are marked to fund the purchase of ING’s Chilean life insurance business, closed in September for an undisclosed amount.

Chilean pulp and paper maker Empresas CMPC has launched a roadshow backing a $500m 10-year bond sale. Investor meetings began in New York Monday and will hit London, Boston and the West coast before finishing Thursday. Proceeds from the 2019s will help finance the $1.43bn purchase of the Guaiba mill from Brazil’s Aracruz. JPMorgan, Santander and BNP are managing the sale, rated Baa2. The company also aims to place 20m new shares at around $25 each, to raise another $500m for the purchase. The remaining $430m will come from the company’s own cash. CMPC agreed in September to buy the Guaiba unit in southern Brazil, which would make CMPC the world’s second-biggest pulp producer.

S&P has cut Chile-based CMPC and its wholly owned subsidiary, Inversiones CMPC, to BBB+ (negative outlook) from A minus and removed them from credit watch amid concerns over rising leverage and aggressive expansion. CMPC was put on credit watch with negative implications September 23 after it said it was acquiring Guaiba, a unit of Brazilian pulp and paper producer Aracruz Celulose. “The rating action reflects the company’s weakening financial risk profile as a result of significant debt increases, particularly during the past year, to finance capital expenditures and acquisitions, amid diminishing operating returns because of adverse market conditions,” says S&P analyst Luciano Gremone. “We expect that CMPC’s business profile will weaken somewhat on higher exposure to volatile pulp prices,” he adds.