Bco Industrial Puts Tier II to Bed

Guatemala’s Banco Industrial priced Wednesday a US$150m 10-year subordinated Tier 2 bond (Ba2/BB) at par to yield 8.25%, coming flat to earlier 8.25% area guidance and at the tight end of low-to-mid 8 whispers. Considered Guatemala’s largest bank, the sub investment grade credit had originally been seeking between $150m-$250m, but capped the deal at the lower end of that range as only $150m could qualify as Tier 2 capital. The bond jumped on the break to trade at 100.75-101.25. While difficult to comp to investment-grade Tier 2 bank issuers that have recently come to market, investors looked at the sovereign, with the deal coming at a quarter point concession to government paper, according to one participating investor. The 144/Reg S notes are secured by a subordinated loan from Bank of America to Banco Industrial, Fitch says. The US bank is transferring its rights to the loan to a trust, which in turn pledges the loan as collateral. Uses of proceeds are slated to repay subordinated debt and to strengthen regulatory capital. The notes are governed by New York law. Banco Industrial was brought to market by sole lead BAML. The issuer last came to market in 2008 when it priced a $30m 60-year NC10 priced at par to yield 9% through Credit Suisse.