Chile Pulp Squeezes New Paper

Chile’s Celulosa Arauco y Constitucion has raised $400m in 2021 bonds some 30bp through initial whispers. The pulp and paper company received $3bn in demand, according to bankers on the deal. The Baa2/BBB/BBB+ issue priced at 99.093 with a 5.000% coupon to yield 5.115%, or UST plus 245bp, inside 250bp-260bp guidance and original whispers of 275bp. “It’s fair value,” says a London-based EM investor looking at the deal, spotting Arauco’s existing 2019 at UST plus 235bp. “It will probably perform well – the hunt is on for investment grade assets,” he adds. A banker on the deal meanwhile pegged the 2019 at 242bp. Other investors note that in the current market, the 10bp difference between the 2019 and January 2021 is acceptable for a quality name that offers LatAm ex-Brazil – and also Chilean ex-Codelco – diversification. The bond traded up about half a point Tuesday afternoon, according to investors. JPMorgan and Santander managed the transaction, which follows a local UF5m ($214m) 10-year bond September 1. Brazilian comp Suzano is expected to sell a 2021 benchmark as soon as Thursday.