Banco Estado Shelves Syndicated Loan

Chile’s Banco Estado, which several weeks ago put out an RFP for a 5-year loan of up to $350m, has postponed launch until early next year due to turbulent market conditions, according to a banker close to the process. The state-owned bank, which is understood to have already tapped an institution to lead the syndication, was apparently greeted with some resistance from prospective lenders who found Estado’s desired pricing of Libor plus 20bp-25bp somewhat tight given current market conditions. Short term borrowing costs for European banks especially have risen significantly in the past weeks, making lending at razor thin margins a tough proposition. Chilean loans are of particular interest at the moment since the country has for years commanded the narrowest margins in the region. In September, Codelco, another state-owned Chilean entity, took out a $400m 7-year step up loan that pays 12.5bp over Libor in year one and 15bp over Libor in the ensuing three years.