Chile starts 2018 capital markets efforts with euro issuance

Chile starts 2018 capital markets efforts with euro issuance

Bonds Debt Capital Markets Chile

Chile has started its capital markets efforts for 2018, turning to Europe for €830m ($1bn) in 2029 paper, DCM sources confirmed.

BNP Paribas, HSBC and Santander started price talk between 50bp and 55bp over mid-swaps, before setting guidance at 40bp and 45bp, DCM bankers said.

Orders were 3.4x oversubscribed, enabling the trio to revise spreads to between 35bp and 38bp over mid-swaps. By launch, the sovereign issuer was set on the tighter side of guidance, or 35bp over mid-swaps.

Chile priced its notes with a 1.44% coupon to yield 1.449%, or a reoffer price of 99.909, bankers confirmed.

According to two sources, Chile's new paper was the first LatAm sovereign to offer no new issue premium in 2018.

"[Chile] hit it out of the park," the banker said.

On the buyside, an investor said this kind of spread was typical of Chile's capital markets exploits, and was not surprised when the investment grade sovereign left nothing "on the table" for bond buyers.

"That has come to be expected from Chile," the buyer said of Chile's lack of new issue premium. "Ultimately, I think that in a way, it is a 'thumbs up' from the market to the new government coming in."

Aa3/A+/A rated Chile reached out to cross-border investors in June, retapping its 4.5% 2021s and 5% 2035s for CLP1.29tn ($1.95bn).

This is the sovereign's first new issue since Sebastian Pinera was elected President of Chile in December. Earlier this week, the President-elect named Felipe Larrain as finance minister, a job Larrain held throughout Pinera's first go-around as President.

Last August, S&P Global Ratings cut Chile to A+ from AA- and shortly after that, Fitch Ratings followed suit, downgrading the copper exporter to A from A+.