ETB to Dial up COP

Empresa de Telecomunicaciones de Bogota (ETB) is taking advantage of a risk-on appetite and a recent Colombian peso rally to issue a $300m-equivalent 10-year peso-denominated bond as soon as today, according to people following the process. Initial price thoughts are heard at low to mid 7%-area. The Ba1/BBB minus telecom had been weighing the local currency sale versus a dollar deal as it met investors through Wednesday. “Basically there is a risk-on sentiment and so it makes sense for the issuer to tap this demand as foreign investors want exposure to EM LatAm currencies,” Benito Berber, strategist at Nomura, tells LatinFinance. This demand is weighed against investors’ concerns about liquidity and price. “It seems too tight for us. We think this should be closer to 8%,” says a US EM portfolio manager following the deal. Comps include BBB minus Emgesa’s 2021 COP bonds trading to yield 6.05% Wednesday, and the Colombian sovereign’s 2021 TES, in the 4.0%-area. “We’re not overwhelmed by the COP outlook from current levels, so the key factor will be spread over the Colombian sovereign,” adds another EM investor. Deutsche Bank and Goldman Sachs are managing the sale, to be ETB’s international debut.