9 de septiembre de 2015 / 17:03 / hace 2 años

LATAM WRAP-Codelco breaks LatAm primary lull

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.

With books swelling to US$6bn by late morning, leads Bank of America, HSBC and JP Morgan were quick to ratchet in guidance to 255bp (plus/minus 5bp) and indicate a hefty US$1.5bn plus size.

Buyside accounts are likely to see value even at tighter levels in light of the dramatic spread widening of Codelco bonds in recent months amid concerns about the slide in copper prices.

Its 2023s widened about 100bp between mid May and late August to reach a peak of 247bp on August 25. That has since narrowed to around 228bp, according to Thomson Reuters data.

“Remember Codelco’s long end was trading at 176bp at the beginning of August so there is value there,” said the trader.

The better tone has extended to other commodity plays, though Brazil remains under pressure, said a second trader.

The 2022s issued by Brazilian miner Vale, for instance, were just 5bp tighter at around 390bp.


Mexican real-estate investment trust Fibra Uno is meeting fixed-income investors this week through Bank of America, Credit Suisse, HSBC and Santander. The borrower is wrapping up meetings in New York and Chicago on Wednesday.

Mexican real-estate investment trust Terrafina has kicked off roadshow after mandating on a potential US$400m-US$500m bond offering.

The REIT finishes meetings today on the West Coast and New York. The borrower has mandated Barclays and Citigroup as lead managers, with Itau coming in as co-manager. Expected ratings are Baa3/BBB-. (Reporting by Paul Kilby; Editing by Marc Carnegie)

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