LatinFinance - July 2013 - 36

Cencosud was invited by Carrefour to
private sale talks and now benefits from
the chance to expand further as a result
of the purchase, says Rodríguez. Owning
the land means it could develop home
improvement stores or shopping center
businesses within its other offerings.
Cencosud also operates a home
improvement business in Colombia. “We
don’t have yet have the department store
business there,” he says. “We have a small
shopping center business which was part
of the Carrefour operation.”
The company started its conversations
regarding financing around the same time
it started talking about the feasibility of
acquiring the asset, says Rodríguez.
“When we finally were awarded with
the assets, we at the same time discussed
what would be the best option to have
a more structured long-term finance of
the operation,” he says. “That is why we
said that we will do a combination of
structured debt, so long-term debt, which
was done by the issue of the bond in the
US by the end of November last year, and
also the equity increase, which was done
in March this year.”

Popular paper

Some 400 accounts put in more than $8.5

Rodríguez: looking north
billion in orders for Cencosud’s 2023
bond, allowing the Chilean retailer to
increase the new issue from a planned $1
billion.
“We had very good demand from the
market, a very good split by geography,”
says Rodríguez, pointing to demand from
the US, South America, Asia and Europe.
Asset managers, insurance companies,
private banks, and pension funds

participated.
With the bridge loan repaid, the
company is focused on consolidating and
integrating its operations, he explains.
Rodríguez says he expects some amount
of market volatility to continue, though
there are opportunities to issue debt.
“We don’t see an immediate need
to go to the market,” he says. “We have
done the work, we have already collected
a large amount of money, we already
have a proper finance structure for the
next couple years. We will always be
looking but we are not directly interested
in taking any opportunities in the short
term.”
Chile, Colombia and Peru all have
scope for more domestically-driven
growth, especially as increasing numbers
of people are brought into the formal
economy, he says. And despite the recent
slowdown in Brazil’s output, Rodríguez is
optimistic about stable demand growth in
South America over the medium term.
“Our governments have understood
the importance of having fiscal discipline
and a well-balanced financial structure,”
he says. “That has meant we have been
able to continue growing even through all
the difficulties we have seen in the more
mature markets.” LF

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Central American or Caribbean corporate with the best capital markets strategy

Digicel

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Fast forward

Digicel took advantage of falling funding rates to refinance expensive debt at
much cheaper levels

amaica-based Digicel knows how to take
advantage of a bull market. Twice over
the past year, the global telecoms operator
has turned to dollar bond markets to bring
down its cost of financing. And both times,
it came away winning.
In September, it sold a $1.5 billion
eight-year non-call four bond, on which
it offered investors an 8.25% yield. The
Caa1/B- rated transaction traded up a

36 LatinFinance July 2013

point on the break. Digicel put the cash
towards a buyback of around $1.2 billion
worth of 2015 securities on which it paid
coupons of 8.875% to 9.875%.
The formula worked again in the
first quarter this year. Rated B1/B, the
borrower sold a $1 billion transaction
at a 6% yield in February. The following
month, it closed a buyback on over $260
million of 2014 notes on which it paid a

12% coupon. The two new issues mean
the company has its bond redemptions
covered until 2016. The transactions also
made the borrower a standout among
Central American and Caribbean capital
market participants. The firm will continue
looking at the dollar market for further
opportunities to bring down the overall
funding cost, says CEO Colm Delves.
“We are experienced issuers at this
stage so it is a pretty well oiled machine
which enables us to move quickly – within
days – when we make a decision to go to
the market,” he says.
The company also refinanced bank
lines in November 2011, and it continues
to speak to bankers on how best to

LatinFinance - July 2013

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