ENAP Squeezes Price on Bond Refi

Chilean oil producer ENAP has raised $300m in 10-year notes following a very brief roadshow in the US and in London. The deal, led by HSBC, Santander and BNP, was launched Tuesday morning and heard garnering $1.5bn in orders, which allowed the company to squeeze out tighter pricing. After indicating guidance of UST plus 300bp area, the A3/BBB/A rated issuer priced at 99.144 with a 6.250% coupon to yield 6.367%, or UST plus 287.5bp. Despite a ratings chop to BBB from A S&P this month, the quasi-sovereign appears to have benefitted from being an infrequent issuer – having last come to market 4 years ago – and from limited supply from LatAm in general. “There’s a scarcity value to Chilean corporate paper,” says an EM investor who participated. Bankers on the deal claim pricing was also favorable versus lower-rated comparables in the region, such as Pemex at 7% area. ENAP’s illiquid existing 2012s and 2014s make concession difficult to determine, say bankers away from the deal, who peg the pricing roughly 100bp wide of Codelco’s 2019s, which they deem acceptable. Some 100 accounts participated in the sale, with 45% based in the US and 43% in Europe. Buyers included a mix of high-grade and EM investors, including banks, private banks, insurance companies and fund managers. ENAP insisted on capping the deal at $300m, despite strong demand, say executives on the trade. The message it wants to send is that it is not increasing its net debt levels, and is in the process of trying to reduce leverage. Proceeds are for short-term debt repayment. ENAP recently raised $300m in bilateral loans from the same 3 banks that led yesterday’s bond, whose proceeds will also go to paying down short-term debt. The transactions fully address 2009 maturities, leaving a small amount to be paid in 2010. The company expects to cover this with its own internally generated cash, says a banker close to the issuer.