Chile Pulp Firm Reopens Local DCM

Chilean forestry products firm Celulosa Arauco has reopened the country’s local debt markets after a dry period of more than 6 weeks, underscoring the belief that there is still firm domestic demand out there. Chile had been among the region’s last to succumb to the international credit shutdown, and bankers hope the $203m-equivalent transaction is an indication that stability may be starting to return. Arauco placed UF5m ($169m) in 21-year notes with a 10-year grace period at 93.92 and a 4.25% coupon to yield 5.00%, or 142bp over the comparable central bank bond. A second UF1m ($34m) 6-year tranche came at 97.29 with a 3.50% coupon to yield 4.90%, or 126bp wide. This was 200bp-300bp inside the dollar curve, according to a banker familiar with the credit but not on the deal. A USD-denominated tranche for up to $355m also aimed at local market has been iced, according to a banker on the deal, who blamed lack of investor appetite. The deal, rated AAA on a national scale by Fitch and Feller, was capped at UF10m in total size and is Arauco’s first domestic placement in 17 years, the company says. “It was a demonstration of confidence in the local markets,” an Arauco treasury official tells LatinFinance. Proceeds will repay short term debt and a longer-term loan coming due next year. “Local investors are open for business for the right names,” says a senior New York-based DCM banker away from the deal. “I don’t think they paid a premium,” he adds. IM Trust managed the transaction. Arauco is controlled by fuel and forestry conglomerate Empresas Copec, and a grower and producer of wood pulp, sawn timber and wood panels operating in Chile, Argentina, Brazil and Uruguay.