BCP Tests Huaso Waters

Banco de Credito del Peru (BCP) is targeting November 3 for a sale of debt to Chilean investors, the second bond to be placed by a foreign company in that domestic market. BCP’s “huaso” issue, as they are known, is set to be an approximately $100m equivalent 2014, according to a banker managing the sale, denominated in either pesos or the UF inflation-linked unit. The UF notes are set to pay a 3.5% coupon, while the peso issue is expected to pay 6.5%. A combination is an option, the banker explains, through the aim would be to issue in one unit or the other, to simplify the process of swapping to dollars. A 3-day roadshow was set to finish today. The deal comes from a $300m equivalent shelf. LarrainVial and BCI are managing the sale. America Movil opened the huaso market in April, pricing UF4m ($145m) in 3.00% coupon 5-year bonds to yield 3.31%, versus a 3.50% target, after drawing demand of around UF6.4m. Citi was the underwriter on the deal, which the issuer says equated to roughly 4.5% in dollars, cheap at the time. The deal took close to 3 years of work with local authorities and investors, and paves the way for more similar trades, which offer domestic accounts diversification. The ideal candidate for this type of deal is an investment grade corporate that is a leader in its sector, say bankers. Having business in Chile helps, but is not a requirement. Bankers are heard pitching several potential issuers in Mexico, Peru, Colombia and Brazil.