Category: Chile

Despite what dollar bond bankers are calling exceptionally attractive market conditions for borrowers, at least one issuer is finding better terms at home. Chile’s Banco de Credito e Inversiones (BCI) has opted for a local 10-year UF-denominated bond issue after a USD issue was cancelled late last week, according to bankers away from the deal. BCI originally intended to go for a 5-year in USD, but a banker who worked on the deal said the issuer recoiled at pricing of 275bp over UST. It was whispering mid 200bp last week. “That is too expensive. Santander, the largest bank in Chile, issued recently at 237bp over Treasury,” says a Chile-based banker. BCI, rated A1/A minus, is the third largest bank in Chile. Santander is rated A+/Aa3. While Santander has $41bn equivalent in assets, BCI has $27bn equivalent. The local bond, likely to be managed by BCI’s own brokerage, could come out in as little as 10 days, a Chile-based banker says. He adds that the bank could issue up to $200m equivalent in UF paying between 40-50bp over BCU-10, which closed Monday at 2.88%. An investor says the Chilean market is comparatively deep, thanks to participation by pension funds, which, along with the advantages of not having to swap dollars for pesos, likely encouraged BCI to stay home. But a banker close to the deal expressed skepticism the issuer would succeed in finding cheaper financing in local markets, even after the swap. BNP Paribas and JPMorgan were managing the USD issue.

A September 24 Daily Brief entitled “BCI Chooses 2015” incorrectly states the rating of Chilean bank BCI. The issuer is rated A1/A minus.

Chile’s Banco del Estado and Peru’s BBVA Continental are set to meet investors next week, hoping to get the same warm reception that greeted recent new bonds from compatriots including BCP and Santander Chile. The Aa3 Chilean bank is set to visit the US and London buyside Monday through Wednesday. Deutsche and JPMorgan are managing the meetings, to which no deal is yet attached. Continental will also meet investors next week, through BBVA and Credit Suisse. Peru’s Interbank is also on the road next week, and Chile’s BCI is expected to price a new 2015 soon.

Chile’s Banco de Credito e Inversiones (BCI) is opting for a 5-year issue, investors say, and whispering mid 200bp pricing. The bank was set to finish investor meetings Thursday. It would be a dollar debut for BBB/BBB minus rated BCI. BNP Paribas and JPMorgan are managing.

While his government plans the sale of certain state controlled assets to help with earthquake recovery costs, Chilean president Sebastian Pinera says a piece of Codelco is not for sale. “Codelco is different – it is part of our constitution. We need a broad agreement in Chilean society and we don’t have that yet,” he says. A 20% privatization of Codelco was once thought possible. Codelco recently hired JPMorgan, Larrain Vial and Santander to explore alternatives for energy subsidiary E-CL, formerly known as Edelnor. Separately, Pinera says he does not expect Chile to be borrowing too much internationally, despite the firm reception to its recent bond offer. “We will not be an active borrower in the international markets,” he says. When planning the recent $1.5bn sovereign sale, its first in 6 years, officials had said Chile wanted to become a more regular borrower. Pinera spoke at an investor presentation in New York organized by the Council of the Americas.

Chile’s Banco de Credito e Inversiones (BCI) is set to begin meeting debt investors today in London and Boston, and visit Switzerland, Los Angeles before finishing up in New York Thursday. BBB/BBB minus rated BCI has not mentioned any details of a new bond, which would be its first in international markets. BNP Paribas and JPMorgan are managing.

Chilean state-owned oil and gas company Enap has hired Santander to oversee forex trading for 4 years, it says, adding that the business is worth $6bn per year. The contract between Enap and Santander will cover FX trading and investment in domestic and international markets. Enap is the leading fuel supplier in Chile, which imports almost all of its crude needs. Enap announced at the beginning of the month that CFO David Jana will leave September 30, to become the senior executive at Bank of America Merrill Lynch for its business in the Southern Cone. It does not name a replacement.