ETB Sees Strong COP Demand

Scarcity value and a pickup to other peso-denominated paper meant a strong bid for Empresa de Telecomunicaciones de Bogota’s (ETB) $300m-equivalent global COP-denominated bond. The city-owned telecom received $2.4bn in orders in its international debut, according to people following the sale, and brought pricing down to the bottom of the expected range. The Ba1/BBB minus bond priced at par with a 7.00% coupon, to yield at the tight end of 7.00-7.25% guidance following low-to-mid 7% talk. “There are not many decent sub-sovereign global COP deals, and people liked this one,” says a New York EM investor who calculates a 50bp-100bp pickup versus similar global COP paper, including Emgesa’s (BBB minus) 2021, which had been trading to yield around 6.00%. While noting that a comparison is difficult, a banker on the deal estimates a peer like Emgesa or Empresas Publicas de Medellin might issue a similar deal at 6.50%-6.75% yield. “It looks attractive to the sovereign TES curve and looks like a good pickup if you are looking to get local exposure,” says another investor following the deal. The sovereign’s 2021s yield in the area of 4.0%. Some 140 accounts participated, with 58% from the US, 19% from LatAm, 15% from the UK, 6% from Europe and 2% from Asia. Some 72% of the buyers were fund managers, 18% hedge funds and 7% private banks, with the remainder other types. Deutsche Bank and Goldman Sachs managed the sale, the first global COP since Brazil’s BTG Pactual raised $200m-equivalent in September.