Emerging Markets: Chile sells $2 billion bonds; Brazil, Mexico, Korea issuers bring ESG deals

By Rebecca Melvin

Concord, N.H., May 7 – Latin American issuers were more active this past week than in recent weeks, with several green or sustainability-linked bonds priced by corporate issuers from both Brazil and Mexico in addition to Korea. The Republic of Chile was one of the few sovereign issuers in the market this past week. It priced $2 billion of sovereign bonds in two parts, according to Prospect News’ data.

Chile priced a tap of 2.45% notes due Jan. 31, 2031 for $300 million and also priced a $1.7 billion tranche of 3.1% social bonds due May 7, 2041.

The tap priced at 100.922 to yield 2.341%, or a spread of 75 basis points over Treasuries. It was initially reported as $500 million in size. Talk was in the Treasuries plus 100 bps area, according to a market source. With the add-on, the total amount of 2.45% notes due 2031 outstanding will be $1,758,000,000.

The $1.7 billion tranche of 3.1% social bonds priced at 97.06 to yield 3.302%, or a Treasuries plus 115 bps spread, lower than Treasuries plus 145 bps area talk.

Proceeds of the notes sold under Chile’s sustainable bond framework will be used to fund eligible social expenditures, which may include tax and operational expenditures such as support for the elderly or people with special needs in vulnerable situations, human rights victims, low-income families and health and other services, according to a 424B2 filing with the Securities and Exchange Commission.

BofA Securities Inc., Credit Agricole Securities (USA) Inc. and Goldman Sachs & Co. LLC are joint bookrunners of the dual-tranche offering.

Brazil, Mexico issuers wade in

For Brazil, Natura Cosmeticos SA issued $1 billion of 4 1/8% bonds due 2028 linked to sustainability goals. The bonds are guaranteed by Natura & Co. Holding SA, and proceeds will be used to refinance existing debt.

The Natura transaction is the single largest sustainability-linked bond issued in Latin America to date, according to the company. It commits the company to meet two environmental performance indicators by the end of 2026, including reducing relative greenhouse gas emissions intensity by another 13% and reaching 25% of post-consumer recycled plastic in plastic product packaging.

The cosmetics company is based in Sao Paulo.

Sao Paulo-based provider of airline services GOL Linhas Aereas Inteligentes SA priced a $300 million add-on to its 8% senior secured notes due June 30, 2026 (B2) at par, according to a press release.

The notes, which were issued via its GOL Finance subsidiary, will be consolidated to form a single series with an initial $200 million of the notes that priced on Dec. 23.

The issuers will pay accrued interest from Dec. 23 up to but excluding the May 11 delivery date of the new notes.

They are callable after Dec. 24, 2022 and are secured by substantially all of GOL Linhas’ intellectual property, including patents, trademarks, brand names, domain names and aircraft spare parts located in Brazil.

Proceeds will go toward general corporate purposes, including liability management and opportunistic aircraft acquisitions.

For Mexico, Orbia Advance Corp., SAB de CV sold a two-part dollar-denominated offering of notes due 2026 and 2031. The $600 million tranche due May 11, 2026 priced with a coupon of 1 7/8%, or a spread of Treasuries plus 110 bps. Talk was higher, in the Treasuries plus 145 bps area.

The company also sold $500 million of 2 7/8% notes due May 11, 2031 with a Treasuries plus 145 bps spread, also low to talk which had been in the Treasuries plus 175 bps area.

Proceeds will be used to refinance debt, mainly its 2022 peso- and dollar-denominated notes, according to the ratings report from S&P Global Ratings.

Citigroup Global Markets Ltd., J.P. Morgan and Morgan Stanley are the bookrunners.

The specialty products provider is headquartered in Mexico City.

Mexican corporates brought two other smaller deals as well. Fibra Prologis raised $370 million through green debt, including a $300 million green U.S. private placement of senior notes and a $70 million-equivalent green bond offering of long-term trust certificates, according to a company press release on Tuesday.

The U.S. private placement notes have a weighted average interest expense of 3.65%, including the estimated corresponding withholding tax.

The senior unsecured notes bear interest at about 3.73%.

The proceeds of both transactions will be used to repay term loans that are due in 2023 and 2024 and pay down borrowings on the company’s line of credit used to finance its eligible green project portfolio.

Based in Mexico City, Fibra Prologis owns and operates class A industrial real estate in Mexico.

And Mexico’s Corporacion Inmobiliaria Vesta, SAB de CV priced a $350 million offering of triple B-rated 3 5/8% sustainability linked notes due May 13, 2031 (Baa3/BBB) on Thursday with a Treasuries plus 220 bps spread, a source told Prospect News.

The issue was expected in the Treasuries plus mid-200 bps area.

BofA, Citi, BBVA and UBS are the bookrunners.

Proceeds will be used to refinance debt and for general corporate purposes, information Moody’s Investors Service included in its rating.

Based in Mexico City, Vesta develops, operates and leases industrial buildings and distribution centers.

Korea issuers go green

Korea’s Shinhan Financial Group Co. Ltd. sold $500 million of 2 7/8% perpetual sustainability notes at a Treasuries plus 206.4 spread, according to a market source.

The notes, sold on Tuesday, were talked higher in the 3.4% area.

The notes are callable starting on May 12, 2026.

BNP Paribas, Citigroup Global Markets Inc., Credit Suisse, HSBC, Mizuho and Shinhan Investment Corp. are bookrunners for the offering.

The financial holding company is based in Seoul, South Korea.

Also Korea’s Incheon International Airport Corp. priced $300 million of 1¼% green notes due 2026 (Aa2/AA/), according to a listing notice.

The notes will be listed and quoted on the Singapore Exchange Bonds Market on Wednesday.

Citigroup Global Markets Ltd., J.P. Morgan Securities plc and Merrill Lynch International are the lead managers and bookrunners of the notes.

The company plans to use the proceeds to fund renewable energy projects, adopt high-efficiency equipment and facilities, develop a green mobility system, take measures to cut aircrafts’ fine dust and exhaust gas and promote a green airport environment, according to a ratings agency press release.

The airport operator is based in Jung-gu, South Korea.

Etisalat represents MENA

Issuers of the Middle East North Africa region were quieter than they have been in recent weeks. But Emirates Telecommunications Group Co. PJSC (Etisalat) represented the region with a chunky €1 billion offering of notes in two tranches, according to a market source.

It priced a €500 million tranche of 3/8% seven-year notes at 99.738 to yield 0.413%, or a spread over mid-swaps of plus 53 bps.

And it priced a €500 million tranche of 7/8% 12-year notes at 98.392 for a yield of 1.018%, or a spread over mid-swaps of plus 78 bps.

Order books were in excess of €6.8 billion, skewed toward the seven-year tranche at the time the launch was announced.

As previously reported, the notes are being sold under the company’s $10 billion euro medium-term note program (Aa3/AA-).

BNP Paribas, First Abu Dhabi Bank, HSBC and Societe Generale are joint lead managers and joint bookrunners of the Regulation S notes with Citigroup and Emirates NBD Capital also mandated as passive bookrunners.

The multinational telecommunications services provider is based in Abu Dhabi, United Arab Emirates.

© 2015 Prospect News.
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