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More LatAm issues in the pipeline

    Rafael Elias
    Rafael Elias

    Director, Latin America Credit

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    Tellimer Research
    16 January 2020
    Published byTellimer Research

    Chile's Sociedad Quimica y Minera Soquimich (SQM) and Brazil's Grupo Globo are both expected to come to the bond market with new issues. 

    Chile's SQM is expected to print today a "benchmark-size", senior unsecured bond due 22 January, 2050 and rated Baa1/BBB+/NR. The initial price guidance is in the T+250bps area. The company's longest currently outstanding bond is its US$450.0mn, 4.25% senior unsecured bonds due 2029, currently seen trading at cUS$107.321 (ALLQ) to yield c3.31% (g-spread 153bps; z-spread 158bps) and has a duration of 7.602 years. Based on these levels, we believe that the new SQM issue could price at a range between T+175bps and T+225bps. Pricing should be today's business. We expect the new issue to be somewhere between US$500mn-750mn, but given the precedent set by other recent issues, we would not be surprised if SQM goes all-in and issues US$1.0bn. 

    In Brazil, media conglomerate Grupo Globo, through its Globo Comunicacoes e Participacoes subsidiary (GLOPAR), is expected to come to the market with a "benchmark size", 10-year senior unsecured bond, with an expected rating of Ba1/BB+. The company's longest currently outstanding bond is its US$200.0mn, 5.125% senior unsecured bonds due 2027 (BB+/BB), which are seen trading at cUS$104.421 (ALLQ) to yield c4.38% (g-spread 266bps; z-spread 271bps) and a duration of 5.866 years. We haven't yet seen an initial price guidance for the new 10-year bond, but we believe that final pricing should be in the T+280bps to T+ 285bps area. 

    Update on most recent issues

    The following new credits priced yesterday as follows:

    1. Chile's Embotelladora Andina (ANDINA) issued US$300.0mn, senior unsecured bonds due 2050 with a 3.95% coupon and a re-offer price of US$99.148 to yield T+175bps. The BBB+ rated issue had an initial price guidance of "low T+200 bps" and came in tighter than guidance, just as we had anticipated – we expected final pricing to range between T+150bps to T+175bps. 
    2. Brazil's Klabin, S.A., through its Special-Purpose Vehicle (SPV) Klabin Austria GmbH, issued US$200.0mn, 7.0% senior unsecured bonds due 2049 at a re-offer price of US$112.189 to yield 6.09%. This was a tap of its existing US$500.0mn bond. We had expected the tap to pierce the 6.0% area of the initial price guidance, given where the outstanding bond was trading (c5.97%). However, the tap did not price as tight and the final pricing was within guidance, offering a minimum concession to bondholders that participated in the tap. 
    3. Brazil's Banco BTG Pactual (BTGPBZ), through its SPV in the Cayman Islands, priced a US$250.0mn tap to its then outstanding US$500.0mn, 4.50% senior unsecured bonds due 2025. The new bonds will become fungible with the original issue on 26 February, 2020 and are currently trading at cUS$102.689 (ALLQ) to yield c3.86% (g-spread 229bps; z-spread 228bps). Back on 3 December, 2019 when the tap was announced, the initial price guidance was 4.625%. The issuer is rated Ba2/BB-/NR.