EPM Goes Large in COP Cross-Border

Empresas Publicas de Medellin (EPM) has raised COP1.25trn ($679m) in 2021 global peso bonds, as investors continue to show a favorable view on the currency. The Baa3/BBB minus utility priced at 99.179 with an 8.375% coupon to yield 8.500%, in line with 8.500% area guidance. Investors placed about $1bn in orders for the deal, according to bankers on the sale, which follows a $402m equivalent raise from peer Emgesa last week. EPM was upsized from an expected $500m equivalent. “We found a lot of appetite from investors wanting more pesos, after the sovereign [COP bond last year],” Oscar Herrera, EPM’s CFO tells LatinFinance. He adds that the issue is the largest ever global-local currency denominated sale from an EM corporate issuer. The 8.5% yield compares to 6.8% on the global 2021 sovereign TES bonds, and 7.9% on the 2019 local TES, Herrera says. “It’s not every country where you can get local currency denominated debt at a premium to the local [government] curve,” says a New York-based EM portfolio manager. He sees room for additional tightening versus the TES curve. Herrera says the bond priced through EPM’s dollar swap curve. EPM plans to use proceeds for general corporate purposes. BAML and Barclays managed the sale, EPM’s first cross-border deal since a $500m 10-year in 2009. DCM bankers say there is demand for more corporate global COP issuers, though they will need name recognition and the ability to do size.