Maturity: October 15, 2014
Issue price: 98.482
Spread at launch: 95bp over the 4.25% August 2014 UST
Launched: Thursday October 21
Joint books: Citigroup, HSBC
HSBC ? The deal went well. The objective was mainly to reduce pricing against the Chilean sovereign and to reduce the spread difference between Codelco and its peers in the US high grade market.
The deal was a huge success in Asia and the UK, which represented about 60% of the order book. Asian and UK orders were not as sensitive as the US investors (to price versus the sovereign) so targeting those investors helped achieve the strategy of reducing pricing to inside the sovereign curve.
This is the first transaction that has priced through the sovereign in many years.
It has also reduced the concession Codelco pays against its peers. It used to trade 40bp to 50bp wide to issuers like BHP, but now it's closer to 25bp to 30bp.
?...we heard they struggled a bit to get it done but in the end we saw a $500m deal at 95bp. First, we saw $500m at 90bp which was a tight price. Then they revised guidance to 95bp-100bp. At 95bp to 100bp you see more value.?
?...Codelco is a tough customer. They are rated one notch better than the sovereign and so they want to price flat to inside the sovereign, which they have never done before.
The fee structure was based on full fees being paid if pricing was flat to inside the sovereign.?