Bank Plants Chilean Flag in Japan

Banco del Estado de Chile has become the first Chilean bond issuer in Japanese yen, raising JPY24bn ($253m) in a Euroyen transaction. The 2018 bond priced at par with a 0.837% coupon, to yield mid-swaps plus 35bp, in line with 30bp-40bp guidance. The price comes inside the bank’s USD curve, helped by what people following the deal describe as a very favorable swap environment for LatAm issuers. Aa3/AA minus/A+ Banco Estado was seen pricing 19bp back of the JPY bonds of Sweden’s Nordea (Aa3/AA minus/AA minus) and 16bp of Dutch Rabobank (Aa2/AAminus), when Estado’s USD bonds trade some 60bp back of the pair’s dollar notes. “Banco Estado blazed the trail for Chilean issuers into the JPY market, achieving exceptional pricing, the lowest 5-year yield on record from Latin America, and well below even JBIC-guaranteed issuance for LatAm borrowers,” Chris Gilfond, co-head of Latin America credit markets at Citi, tells LatinFinance. “A turning point for Latin American issuers is to find a market where it could price inside its dollar curve, and Estado is a clear leader here,” says another person following the transaction. Citi and Daiwa managed the sale. The deal follows a $200m reopening of Banco del Estado’s 2017 USD bond in May. Banco do Brasil raised JPY24.7bn though a Euroyen bond transaction last year in September, the last pervious LatAm yen sale. Euroyen – a yen-denominated bond issued by a non-Japanese company outside of Japan – represents an alternative format to the Samurai yen-denominated bonds that various LatAm issuers have used in recent years. The deal was one of the few getting done in LatAm during the last two weeks, with many issuers waiting for better dollar market conditions. Brazil’s Banco Pine is meeting investors in Geneva and Zurich today ahead of a potential CHF100m ($107m) Swiss Franc debut with a 3-year or 5-year maturity. Banco do Brasil and Odebrecht are also waiting for an opportunity, the former planning a euro-denominated bond and the later a