Flash Report /

Chile: SQM's new deal

    Rafael Elias
    Rafael Elias

    Director, Latin America Credit

    Tellimer Research
    29 April 2019
    Published by

    On 29 April, Chile's Sociedad Quimica y Minera de Chile S.A. (Soquimich, SQM), one of the world's largest holders of iodine and lithium reserves and manufacturer of potassium nitrate, iodine and lithium, is expected to come to the market with an intermediate maturity, 144A/RegS US$-denominated bond (expected to be rated Baa1/BBB+/NR), for which the company is holding a roadshow on 29 April-1 May.

    The company has three US$-denominated bonds:

    1) US$250mn, 5.50% senior unsecured bonds due 2020, rated Baa1/BBB+/NR, currently trading at cUS$103.07 (TRACE) to yield c2.28%;

    2) US$300mn, 3.625% senior unsecured bonds due 2023, rated Baa1/BBB+/NR, currently trading at cUS$101.746 (TRACE) to yield c3.15% (g-spread 86bps; z-spread 82bps); and

    3) US$250mn, 4.375% senior unsecured bonds due 2025, rated Baa1/BBB+/NR, currently trading at cUS$101.80 (TRACE) to yield c4.00% (g-spread 167bps; z-spread 165bps).

    To our knowledge, there is still no information regarding the size and/or tenor of the bonds, or about initial pricing, but we believe that, even if the bonds end up pricing tight, they will see strong demand from local pension funds. 

    Pension funds tend to be big holders of SQM debt given the company's high quality, strong financials and positive business outlook. This positive outlook is driven, in large part, by its substantial reserves of chemicals, used in high-technology sectors such as the manufacturing of media and telephony screens, medicine, fertilisers and many other industries.