Santander Chile Squeezes Dollar Market

Santander Chile reigned in pricing on a $500m bond, locking in UST+157bp well inside initial whispers of 175bp area and tight to 160bp area guidance. Demand for the issuer’s first sale in 4 years reached about $2bn, according to bankers managing it. The bank priced the 2012 bond at 99.855 with a 2.875% coupon to yield 2.926%, or UST plus 157bp. The Aa3/A+ deal was heard trading at flat to up 0.125 points in the gray Monday afternoon. Despite the tightening, investors say there was still some incentive to participate. “There is a pickup relative to some AA minus level comparables,” says a New York-based EM investor, offering Nordea as an example. The Swedish bank rated AA minus sold $500m in 3-year bonds last week to yield UST+120bp, as part of a $2bn sale. Santander Chile’s existing dollar bonds are illiquid, investors say, and less useful as comps. Scarcity value for the financial sector may have also helped. The issuer chose the 3-year maturity as it was a good match for its funding needs and the most attractive point on the curve for swapping into CLP, says a banker on the deal. Deutsche Bank, JPMorgan and Santander managed the sale. Proceeds from the bond issue are earmarked for general corporate purposes. Largely able to fund itself in the domestic market, Santander Chile’s last dollar foray was in 2004, when it issued $400m in a 2009 at Libor+35bp and $300m in a 5.375% of 2014 via Deutsche and Santander.