Flash Fixed Income Report /

Peru: Intercorp joins the wave of new LatAm issues

    Rafael Elias
    Rafael Elias

    Director, Latin America Credit

    Tellimer Research
    17 July 2019
    Published byTellimer Research

    Intercorp Peru Ltd., a Peruvian financial institution and the parent company of Intercorp Financial Services, InRetail Peru, InRetail Pharma and InRetail Shopping Malls among others, is planning the issue of a senior unsecured bond with “intermediate maturity” and expected BBB-/BBB- ratings. The roadshow is expected to end on 23 July and pricing thereafter, if market conditions allow.

    We believe this credit is strong and although there is no initial price talk (IPT) yet, its currently outstanding US$250mn, 5.875% senior unsecured bonds due 2025 (Ba1/BBB-/BBB-) are trading at cUS$104.866 (ALLQ) to yield c4.86% (g-spread 298bps; z-spread 300bps) and a duration of 4.732 years. Due to this duration, we believe the “intermediate maturity” of the new issue could be 10 years, size above US$300mn and the bonds could price in the low-to-mid 5.0%.

    Proceeds from the issue are expected to be used to tender the currently outstanding bonds described above.

    Given the high quality of the credit, the lack of Peruvian new issues, the positive economic environment in the countries where Intercorp has operations, and the success that we have seen with recent LatAm issues – most of which have priced at tight levels – Intercorp Peru’s new issue should generate strong investor demand.