Investors Crowd into Bancolombia Tier 2

Bancolombia and Brazil’s Vale became the first LatAm issuers to hit the DCM in what should be an active September, with the Colombian bank raising $1.15bn on the back of $7.2bn in orders, according to bankers on the deal. Capitalizing on a scarcity value of Colombian credits, the Baa3/BBB minus lender priced a new 2022 Tier 2 bond at 99.421 with a 5.125% coupon to yield 5.20%, or UST+362.6bp, the tight end of 5.375%-area guidance that followed initial 5.5% talk. The bond was trading up about 0.75-0.90 points in the grey Tuesday afternoon, according to an investor. “The deal left little on the table but it was a win-win situation for the issuer and investors,” says a participating NY-based EM investor who saw the deal price flat to the levels on the bank’s 2020 Tier 2 bonds. Bankers on the deal spotted the 2020s prior to announcement at levels of UST+371bp on an interpolated basis, which would indicate a negative concession of about 8bp. “Good trade, no concession and smart timing,” says a banker away from the deal. Some 390 accounts participated, according to a banker on the deal. The transaction is the first from a $1.2bn debt program approved last week. Bank of America Merrill Lynch, Citibank and Morgan Stanley managed the sale, which can be increased by up to $50m during Asian hours. More LatAm cross-border issuance should be on the way this week. Issuers currently on the road include the government of Aruba and Chile’s Banco de Credito e Inversiones (BCI), which are heard looking at a $253m 11-year bond and a 2017 issue, respectively. Peru’s Maestro, Chile’s Arauco, Brazil’s Caixa Economica Federal and Panama’s Global Bank are also among the issuers in the pipeline.