Chile’s central bank chose to maintain the benchmark interest rate at 5.25%, in line with the market’s expectations. In a statement, the bank cited slowing global growth, and says that volatility could be worse than expected, with implications for Chilean growth, inflation and monetary policy. In a recent poll taken by the central bank, most analysts said they expect a cut to 5.0% by the end of the year. Mexico is scheduled to make its interest rate decision today. At its last meeting, Banxico held the benchmark rate at 4.5%, through many, such as Morgan Stanley see the door open for a 25bp cut by the end of the year.
Category: Regions
Posted inDaily Brief
Liverpool Files MXP Shelf
Mexico’s Liverpool has filed a shelf to issue up to MXP25bn ($1.8bn) in the domestic market. The retailer has not given timing and size details. Banamex, BBVA Bancomer and HSBC are managing the program. Liverpool last tapped the domestic market in 2010 when it priced MXP2.25bn in 2020 bonds at 8.53%, or Mbonos+128bp, and MXP750m of 2020s in inflation-linked UDIs at 4.22% or Udibonos+92bp. Banamex and HSBC led last year’s deal. Liverpool is rated AAA on a national scale.
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Colombian DCM Keeps Moving
Colombian bond markets continue to be open for business following the COP180bn ($95m) sale from power transmission from Transleca, with Findeter and UNE also preparing issuances. Transleca this week placed COP80bn in 2021 bonds at IPC+4.2% and COP100bn in 2026s at IPC+4.48%. Correval managed the sale, rated AAA on a national scale. Proceeds are marked for debt management and for working capital. State-owned development finance agency Findeter also plans to sell up to COP200bn, with a tentative pricing date of October 25. The bank wants to issue 2 and 3-year bonds paying spreads to the interbank rate IBR, and 5-year notes paying a spread to the IPC. As with previous issuance, the AAA national-scale issuer is structuring and coordinating the issue itself, aided by several local brokerages. Empresas Publicas de Medellin-owned telecom UNE is also hoping to revive a COP300bn sale postponed from the end of September, with timing slated for next week depending on market conditions.
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CAF Returns to Swiss Market
Regional development bank CAF became the sole LatAm issuer to tap the international markets Thursday when it raised CHF125m ($139m) in the Swiss franc market. Upsized from an initial target of CHF100m, the long 5-year bond came at a reoffer price of 100.264 with a 2.75% coupon to yield 2.697% or mid-swaps plus 185bp. CAF has become a frequent issue in this niche market. In January, it reopened its 2.625% of 2015s to raise CHF130m. At the time, the borrower said that pricing came inside its dollar curve after it retapped the bond at 99.791 to yield 2.774%, or mid-swaps plus 140bp.
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Arca Continental Prices MXP Bond
Arca Continental raised MXP3bn ($226m) in the Mexican bond market Wednesday. The bottler priced a MXP2bn 10-year fixed rate bond at 7.63%, or Mbonos +130bp and a MXP1bn 5-year floater at TIIE+ 25bp. Pension funds took part in the fixed-rate deal while private banking and investment funds participated in the floater. BBVA Bancomer, Bank of America Merrill Lynch and HSBC managed the deal, rated AAA on a local scale. The issuer last came to the Mexican domestic market in November 2010, when it priced a MXP3.5bn fixed and floating rate deal via HSBC. On that occasion, the borrower paid TIIE + 29bp on a 5-year and Mbonos +114bp on a fixed-rate 10-year.
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Banco de Chile Heads to Mexican DCM
Banco de Chile has filed a shelf to issue up to MXP 10bn ($752m) of debt in the local Mexican market. Banco de Chile will be the third Chilean issuer to tap the Mexican domestic market following similar moves by Banco de Credito e Inversiones (BCI) and Chilean miner Molymet. “Chilean issuers are turning to the Mexican market because it is attractive and offers an alternative for issuers to finance themselves,” says a banker managing the sale. Banamex and JPMorgan are leads. Timing and tenor have yet to be determined.
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Banobras to Issue MXP
Mexico’s Banobras plans to issue bonds in the Mexican domestic market via Bank of America Merrill Lynch and Banamex. Details on issuance date, size and tenor have not yet been determined. Banobras last issued in the local market in 2010, when it sold MXP7bn in 4-year bonds after generating some MXP19bn in demand. Banamex led its last deal, rated Aaa on a national scale by Moody’s. Banobras provides financing for states and municipalities, particularly for infrastructure projects.
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Pemex Breaks DCM Silence
Pemex emerged Wednesday with the region’s first cross-border bond sale in more than a month, making an opportunistic retap of its 6.5% 2041 that allowed it to raise $1.25bn. Supported by some $300m in reverse-enquiry demand, the state-owned oil producer sallied forth Wednesday morning with what it described as a benchmark-sized trade and whispers in the plus 325bp area. The 35bp spread concession against the bonds 290bp opening level was seen as attractive and generated sufficient interest to build a book that breached the $5bn mark. All this meant that the borrower could upsize from its original benchmark level and price at the tight end of the UST+320bp (+/-5bp) guidance, or at 102.131 to yield 6.339%. “The retap comes at 140bp spread over the sovereign and represents fair pricing and offers some value,” notes a participating investor. BNP Paribas and Deutsche Bank managed the 144a/RegS deal, which is rated Baa1/BBB. Barclays and Natixis came in as co-managers.
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BRICS Set Up Exchange Alliance
Brazil’s BM&FBovespa has agreed to form an alliance with the Hong Kong, Johannesburg, Moscow, Bombay and Indian National exchanges. Together, these markets represent a combined listed market capitalization of $422bn, a monthly trading volume of $422bn as well as 9,481 listed companies. Initially the exchanges will cross-list benchmark equity index derivatives on alliance member boards, but they are expected to later develop more innovative products to track the combined BRICS exchanges.
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Codelco Borrows from Offtaker for M&A
Taking the unusual step of turning to an offtaker for financing rather than banks, Codelco has agreed to a standby bridge loan of up to $6.75bn from Japan’s Mitsui and Co., to help fund the Chilean state-owned miner’s possible purchase of up to 49% of the Anglo Sur mining complex. Codelco has an option to buy the position in the Chilean complex, owned by Anglo American, and this can be exercised beginning in January. Codelco says it values the stake at $9.76bn. Once the loan is disbursed, the credit would have a tenor of up to 12 months. If not repaid with cash or 50% of Codelco’s Anglo Sur equity interest at the end of the 12 months, the debt would automatically be converted into a 5-year term loan. Company officials did not respond to requests to comment on the interest rate. The option to acquire the 49% stake had previously been held by fellow Chilean state mining company Empresa Nacional de La Minera, which sold it to Codelco for $175m. The option comes up every 3 years and expires in 2027. The bridge financing arrangement comes as Codelco and Mitsui announce an offtake agreement for 30,000 tons of copper per year subject to market based pricing terms. Anglo Sur includes the Los Bronces and El Soldado mines, the Chagres smelter and the Los Sulfatos and San Enrique Monolito prospects.