Transelec Bonds Could Price High

Chilean DCM bankers off the deal say they expect the bonds of local power transmission company Transelec, rated A+, to price similar to issuers in the BBB range because the company is highly leveraged. According to Fitch, the company has a debt-to-Ebitda ratio of 5.2x on net debt of CLP789.7bn ($1.2bn) as of September 2010. Transelec, which expects to issue UF6.5m ($282.0m), is expected to see a spread of around 110bp-130bp over the BCU benchmark, bankers say. “That is about 20bp-30bp wider than what an A+ rated company could get,” says one of the bankers. A company spokeswoman declines to speculate on spreads as the roadshow is still underway. Corpbanca and Scotia are leading the sale.