Codelco Entertains Loan Ideas

Chilean copper miner Codelco, which is heard entertaining pitches from banks to raise some $400m in 3-year funds, is heard to also be considering raising funds on a bilateral basis as one of the options for any potential new facility. This strategy has already been deployed by quasi sovereigns like Petrobras and Pemex. Earlier this year, Petrobras raised over $5bn in bilaterals and followed up with a $1.5bn 10-year bond. Pemex was heard seeking $1bn in bilateral loans ahead of its MXP10bn local market bond issue. Appetite for bank lending appears to be picking up, and Codelco and the region’s other highly-rated borrowers will be first to benefit, say bankers. One banker says Codelco isn’t aggressively seeking out funds, but rather is being propositioned by lenders which see an upcoming maturity later this year. “Banks are throwing cash at [Codelco,]” remarks another syndications official. While pricing for 3 years was first proposed at or just below the 275bp over Libor that Bimbo paid in March, eagerness on the part of the pitching lenders and Codelco’s apparent coolness on the proposed levels has helped push pricing discussions down to the 225bp range, says one lender. Negotiating bilaterals, while more cumbersome in some ways, gives the borrower greater ability to lean on a relationship to obtain lower costs, since pricing need only be designed to satisfy one lender. ENAP, the state-owned oil company, is also heard close to issuing an RFP for an up to $500m facility, also in the 3-year range. One banker says that borrower may also look to do raise the funds on a bilateral basis too.