EM LATAM CREDIT: Chile's ENTEL (Baa3neg/BBB-/BBB-) 4Q Earnings
“Entel Chile Q4 Profit CLP2.818M vs. CLP75.601M YoY” – BBG
Positive for Spreads
• Entel is Chile’s largest wireless telecom carrier with 32% market share and 2nd largest in Peru with 24% market share. The company just announced decent earnings which showed top line growth, capex discipline and stable credit metrics. Entel has benchmark 2032 bonds trading in a very stable spread range these past few months, last at T+168. The company has a 2026 bond which has an amortization of USD400mn in 2025 so the company is analyzing their options which may include a new USD bond issue according to the latest conference call.
• The bonds look interesting as they offer a pickup to other Chilean investment grade credits like Colbun (COLBUN; Baa2/BBB/BBB+), Celuloso Arauco (CELARA; Baa3/BBB-/BBBneg) and Cencosud (CENSUD; Baa3/-/BBB). Also, there aren’t many investment grade rated telecom bond issues in Latam other than Mexico’s America Movil (AMXLMM; Baa1/A-/A-pos) which is much higher rated so bonds trade much tighter.
• Chile revenues rose 9% while Peru was up 14%. Ebitda margin was slightly down but stable, 29% from 30% while Net debt/Ebitda closed the year stable at 2.5x. Capex dropped in Chile, rose in Peru and net was flat y/y. On the 4Q conference call the company guided an increase in capex from this past year but assured investors they would manage the level consistent with its financial policies to preserve its investment grade ratings.
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