LATAM WRAP-Codelco breaks LatAm primary lull
By Paul Kilby
NEW YORK, Sept 9 (IFR) - Prospects for stimulus measures in China flung open a rare window on Wednesday for Codelco, as the Chilean copper giant took advantage of a broader rally to move ahead with its long-delayed bond sale.
The change in market sentiment - plus generous initial price thoughts - attracted investors still wary about slowing Chinese growth and its impact on emerging market credits, especially commodity names like Codelco (A1/AA-/A+).
"Copper has broken out of its range to the upside and concerns over China have been allayed, so this deal should go well," said a New York-based trader.
Leads on the new 10-year, Latin America's first corporate deal in over a month, clearly played it safe by testing buyside appetite with charitable IPTs of 275bp.
At that level, bankers and traders were calculating concessions of 30bp-35bp on top of the 250bp-240bp fair value seen on a 10-year issue.
"By Codelco's standards it was a generous start," said a banker away from the deal, who noted that it was also providing a generous pick up to the Chilean sovereign's 2025s, which were trading with a spread in the mid 90s.
The deal also looks cheap against other similarly rated miners such as BHP Billiton (A1/A+/A+), which has 2023s trading at around 160bp over US Treasuries.
"BHP is more diversified, but it doesn't have the sovereign behind it," the banker said. Continuación...