Colbun Upsizes, Tightens Debut Bond

Chile’s Colbun has raised $500m, upsized from $400m, in its first dollar bond sale, pricing inside initial guidance. The power generator drew more than $2bn in orders, according to bankers on the sale. The BBB/BBB minus 2020 came at 98.973 with a 6.000% coupon to yield 6.139%, or UST plus 237.5bp, well inside 262.5bp area guidance. The bond was heard trading up 0.50-0.75 points in the gray Thursday afternoon. “It’s a first time issuer, but its an easy-to-follow company with strong shareholder support in a defensive market” says a participating EM investor. Despite the tightening, the buysider still calculated a tiny pickup, after adjusting for duration, to Endesa’s 2027 bond, which trades around 6.8%. A banker on the deal points to Colbun being in a defensive sector in a stable economy as driving demand and driving the upsize and tightening. About $250m of proceeds are expected to be used for cancelling outstanding debt and $150m to finance expansion, according to S&P. Citi and JPMorgan are managing the sale. Though this is the first cross-border issue for Colbun, the borrower has made extensive use of the bank and local bond markets. In 2008, it raised a $400m 5-year syndicated loan led by ABN, BBVA, Citi, Itau and Santander.