10 de noviembre de 2015 / 15:47 / en 2 años

Chile's Tanner postpones bond sale until next year

NEW YORK, Nov 10 (IFR) - Chilean financial company Tanner Servicios Financieros has postponed a US$300m bond sale until next year as it awaits better market conditions, a source told IFR on Tuesday.

Tanner (BBB-/BBB-) delayed the sale of a five-year bond on Friday after US Treasury yields widened in the wake of a stronger-than-expected jobs print in the US. It had hoped to return on Monday once market conditions had settled down.

But the deal seemed ill-timed to bankers who questioned why Tanner would try to print on a key data day, especially amid speculation about a Federal Reserve rate hike in December.

“We were surprised that they would test the market on Friday ahead of one the most anticipated economic numbers,” said a syndicate manager.

Some also thought initial talk of 5.5% area too aggressive.

On Friday, that translated into a spread of around 377bp over Treasuries, or a concession of around 25bp over fair value, after accounting for an additional 25bp-30bp of curve extension, said a banker away from the deal.

“It looks on the tight side,” said the banker, who had the company’s March 2018s quoted at 100.375 for a spread of 318bp over US Treasuries.

This comes at a time when investors are largely in defensive mode ahead of year-end and less willing to take risks on a relatively small issue from a lesser-known credit.

“It is a smaller (financial entity) and is perhaps more susceptible in a weakening economic cycle than the average commercial bank,” said the banker.

“I don’t know if it is a matter of price, or if it is the kind of name that people don’t want to buy in this environment.”

The borrower, which has no need to raise the funds right away, will likely wait until January to return to market, said the source.

Bank of America Merrill Lynch and JP Morgan acted as leads on the trade. (Reporting by Paul Kilby; Editing by Marc Carnegie)

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