Cencosud Flexes Up as Market Turns

Chilean retailer Cencosud has resumed syndication of a $480m 5-year loan after flexing margins higher to reflect worsening conditions for borrowers in this market. The bump in price evidences a pickup in the cost of lending to the region. It also acknowledges Cencosud’s unexpected $500m acquisition of Peru’s Wong halfway through the syndication process. Despite the fact that Wong was paid for with cash and equity, it has required lenders to rethink their commitment to the $480m loan, whose proceeds are for the acquisition of Brazil’s G. Barbosa. New pricing on the 5-year amortizer steps up from Libor plus 50bp in year one to 55bp in year two, 60bp in year three, and 65bp in years four and five. Originally, Cencosud offered to pay 35bp, 40bp, 45bp and 60bp, respectively. The facility amortizes by 25% in years three and four, and the remaining 50% in year five. Santander is leading with BBVA and BNP as bookrunners. The deal was relaunched in the second week of January and aims to close in early February.