UPDATE 1-Cencosud breaks new ground with 30-year bond
(Updates with additional information)
By Paul Kilby
NEW YORK, Feb 5 (IFR) - Chilean retailer Cencosud is breaking new ground today with a rare 30-year bond as part of a dual-tranche offering that marks the region's first high-grade corporate offering of the year.
Few borrowers from the double A rated country have sought 30-year money in the international market. The only exception has been state-owned copper giant Codelco as well private names like iron ore company CAP and utility Endesa - which issued long-term paper back in 2006 and 1997, respectively.
"It is important for the Chilean dollar market and is a significant milestone that opens the door for other Chilean corporates," said a New York based corporate bond trader.
The move makes sense given the recent US Treasury rally and the subsequent bid for duration, not to mention a flight to safety bid among high-grade names that haven't been impacted by the recent dive in crude prices and the corruption scandal at Brazilian oil unit Petrobras.
At initial price thoughts of mid 300s, the 10-year was seen coming with a premium of some 30bp over the existing 2023s, which were being quoted earlier today with a G-spread of around 320bp. And with the IPTs on the 30-year a low 400s, it seems that leads were targeting a 10-to-30s curve of around 75bp.
That is slightly flatter than corporate credit curves in Mexico, where the likes of Alfa, Mexichem and Fibra Uno have seen the spread differential between 10s and 30s close to 100bp or above, said a senior banker.
"It is hard to say where the 10 to 30s curve should be (in Latin America) given that the US 30-year Treasury is trading where the 10-year used to be, but 75bp is not out of line," the senior banker said. "Even the US high grade 10s to 30s has been in the 40bp-55bp range." Continuación...