Cencosud Bags Acquisition Funds

Investors put in more than $8.5bn in orders for Cencosud’s 2023 bonds, allowing the Chilean retailer to upsize the new issue to $1.25bn from a planned $1bn. Fresh off of a $2.6bn cross-border acquisition that made it Colombia’s second-largest retailer, the operator of supermarkets, hypermarkets, and other retail operations is raising funds to take out an 18-month bridge loan. The Baa3/BBB minus bond priced at 99.062 with a 4.875% coupon, to yield 4.993%, or UST+337.5bp, tight to 340bp-350bp guidance revised from a 362.5bp-area level that followed 375bp-area initial talk. The bonds were trading up 0.375 points in the grey, according to traders. “The deal offered 25bp to existing 2021s,” says a New York-based investor citing fair value. Leads spotted the 2021s at 4.60% yield pre-announcement. Some investors expressed concern on the issuer’s negative outlooks placed on its credit ratings, though during the roadshow Cencosud’s management was heard stressing its commitment to keeping credit metrics in line with an investment grade profile. Initiatives include a $1.5bn equity capital raise, to be completed by January, and capex reduction, among other initiatives to reduce leverage. Some 400 accounts participated in the deal. JPMorgan was global coordinator and joint bookrunner with BBVA, BNP Paribas, Itau, Mitsubishi UFJ, Mizuho and Santander as joint bookrunners. Cencosud agreed to buy Carrefour’s Colombian operations last month for $2.6bn. With bond debt remaining cheap and many large cash-flush LatAm corporates looking for acquisitions, bankers expect bond market takeouts of short acquisition loans to become more common in 2013.