Ten months good, two months bad...
Latin American borrowers have rarely had as good a reception in international capital markets as they did in the first half of 1997. Many corporate treasurers took advantage of favourable market conditions to issue long-term debt, thereby giving a better balance to their debt-maturity profile. None more so than Endesa (Empresa Nacional de Electricidad), the Chilean electricity generator that in January became the first Latin American company to issue a century bond.
Investor appetite for long-tenor Chilean paper had been demonstrated at the end of 1996 when Enersis did a very large $800 million offering led by JP Morgan. (Enersis's major holdings include stakes in Santiago electricity distributor Chilectra and a controlling interest in Endesa, and it is active elsewhere in Latin America and has a strategic alliance with Endesa Spain.)
The Enersis deal was split into three tranches, including $350 million of 20-year bonds. But the market moved considerably in the next couple of months, and by the time Endesa came to market early in 1997 an appetite for even longer tenors had emerged among investors in Latin American paper.
Winning the Endesa mandate was a coup for Chase Securities, which has been pushing hard to win more bond-underwriting mandates in Latin America to complement its strong position there in the syndicated-loan market.