Endesa Goes Long in UF

Chile’s state-owned electricity company Endesa has issued $332m equivalent (UF10m) in 21-year inflation linked 4.75% coupon bonds at 99.33 to yield 4.81%. The issuer was also considering selling 5 and 10-year notes for a maximum UF10m size, but placed the whole deal at the long end. “Demand at better pricing, curiously enough, was at the longer tenor,” Santiago-based BBVA director Alejandro Bertrand tells LatinFinance. “Endesa is a safe haven for Chilean investors,” he adds. Bertrand says that the spread was some 161bp over the government curve, versus a 175bp target when the issuer first went out. “This is almost double what they were paying a year ago,” adds the banker on the deal, who says it was slightly oversubscribed. AFPs consumed 60%-70% of the offer, while life insurance companies took roughly 30%, with the remainder going to brokers, banks and mutual funds. Total demand was UF12.15m, says Bertrand. The locally placed notes amortize in equal biannual installments starting June 15 2019 and are callable in December 2011 at a make whole of 70bp. Feller Rate and Fitch gave the deal an AA minus rating. BBVA was the lead and proceeds are earmarked for refinancing short and long term debt. The BENDE-M series auction was done Thursday by electronic Dutch auction. According to Bertrand, there is still demand in local markets, aided by the fact that the captive domestic investor base is repatriating funds following overseas losses. “There is money for good names,” he adds. Chile’s pension funds have roughly $100bn in assets.