CMPC Book Heard Slow to Build

Investors note resistance to a $500m 2018 from Chile’s CMPC, which priced Thursday flat to guidance on tepid demand. “The market has been picky in terms of yield, especially with investment grade issuers, due to concerns about US treasury selloffs if interest rates rise,” Diego Torres, corporate debt analyst at Santiago-based Munita, Cruzat y Claro, tells LatinFinance. The buyside says the book was slow to build at the initial whispers. It eventually grew to $1.1bn, according to a banker on the deal. CMPC, a forestry and paper company, whispered UST plus low 200bp Thursday morning, before announcing 220bp area guidance. The Baa2/BBB+ 2018 priced a 4.75% coupon at 99.524 to yield 4.831%, or UST plus 220bp. “With the 2019 trading just inside 200bp, I don’t see much of a pickup on the new bond,” says a London-based EM investor. The bond rose 0.25 points Thursday, according to a trader. The deal follows an issue from fellow Chilean investment-grade Cencosud that was well-bid (a $2.6bn book, the bankers say) despite being tightly-priced at UST+ 230bp to yield 5.661%. Cencosud, which raised a $750m 10-year Wednesday, finished up flat to 0.25 points. Torres says the CMPC bonds could tighten another 10bp, based on CMPC’s 2019 trading to yield around UST+190bp. Citi, Itau, JPMorgan managed the CMPC sale, anticipated ever since the firm met investors last year. It is the issuer’s first bond since a $500m 2019 sale in 2009. With at least 6 credits meeting investors next week, it is shaping up to be a busy January, at least for corporate issuers. “Investors are clamoring for new names,” says a DCM banker. He adds that the number of deals is not stoking fears of saturation, as most are likely to be for $500m or less. “Investors are being choosy with yield, but if they look at their cash positions, they will see they need paper,” says another DCM banker.