Following up on our 7 January report, Colombia's Termocandelaria Power Limited (TERMOC) is today expected to issue a US$185mn tap of its outstanding US$410mn 7.875% senior unsecured bonds due 2029 (BB/BB+). Full guarantors are Termocandelaria S.C.A. E.S.P. (TECAN), Energy Projects Leasing Co., LLC, and Los Amigos Leasing Company Ltd. There is also a partial guarantee from Termobarranquilla S.A. E.S.P. (“TEBSA”) for up to US$122.4mn.
The bonds have an amortisation schedule of 7.5% per annum, starting in 2021, and a balloon payment of 40% in 2029.
The outstanding bonds trade at cUS$111.409 to yield c4.53% (g-spread 292bps; z-spread 254bps) and initial price guidance for the tap was in the US$109.50 area to yield (to maturity) c5.99% (although, at US$109.50, g-spread would be 360bps, z-spread would be 326bps, and yield (to worst) would be 5.64%). In terms of yield-to-maturity, at US$109.50, g-spread would be 461bps, z-spread would be 425bps and yield would be 6.47%.
Given where the outstanding bonds are trading, we expect the final pricing to be substantially tighter than the initial price guidance and, as has been the case with other Latin American new issues this week, we also expect robust demand for this tap.
We expect pricing today.