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Pricing on new issues from Intercorp Peru and Brazil's Cosan

    Rafael Elias
    Rafael Elias

    Director, Latin America Credit

    Tellimer Research
    24 July 2019
    Published by

    We now have the initial price guidance for two new issues that we said last week were coming to the market.

    Intercorp Peru Ltd is expected to price a 10-year US$300mn senior unsecured bond (no grow), due 2029 and rated BBB-/BBB-, today. The proceeds are likely to be used to purchase any and all of Intercorp Peru's existing US$250mn 5.875% senior unsecured bonds due 2025, which trade at cUS$104.856 (ALLQ) to yield (to maturity) c4.86% (g-spread 303bps; z-spread 306bps), yielding (to worst) 2.24% (g-spread 19bps; z-spread 3bps).

    The initial price guidance for the new issue is T + 237.5bps, which we regard as tight, as has been the case for most issues that have come to the markets recently, with a few exceptions.

    In Brazil, Cosan Ltd (BB-/BB-) is expected to come to the market with a "benchmark size" new senior unsecured issue, with a 10-year maturity (non-call 5). This will fund the tender offer of its US$500mn 5.95% notes due 2024 that trade at cUS$106.428 (ALLQ) to yield c2.96% (to worst) for a g-spread of 103bps and a z-spread of 96bps, or a yield to maturity of 5.58% (g-spread 276bps; z-spread 278bps).

    The new bonds are likely to price in the "high 5.0%s", which we believe is fair.

    Finally, yesterday's sovereign issues from the United Mexican States, or Mexico (MEX), priced as follows: 

    • The US$270mn tap of the 4.50% bonds due 2029, priced T + 165bps; and
    • The new US$1bn 30-year bond due 31 January 2050, priced at T + 195.5bps.

    These two issues were also on the tight side, in our view.