Buyside Likes Santander 3-Tranche

Taking advantage of investor demand for high-quality Chilean credits, Banco Santander Chile has sold $1.2bn in 3 tranches, including the first-ever non-sovereign global CLP bond and a late-added floating-rate piece. Investors ponied up for more than $1.6bn in orders for each of the $500m 2015 dollar bonds and the $500m 2020 notes denominated in CLP and payable in dollars, representing the first-ever non-sovereign global CLP, and the first non-sovereign local currency bond from LatAm since a Banco de Credito del Peru issue in 2007, according to Dealogic. “There’s always going to be demand for a high-quality name funding in its own currency, and with an expectation for liquidity,” says a New York EM investor considering the deal. The dollar bond priced at 99.716, with a 3.750% coupon, to yield 3.813%, or UST plus 237.5bp, the tight end of 237.5bp-250bp guidance. A $500m equivalent 2020 peso tranche came at par with a 6.50% coupon, to yield the tight end of 6.50%-6.75% guidance. Finally, a $200m 2011 floating-rate note priced at Libor plus 100bp, in line with 100bp guidance. Total demand was $3.0bn-$3.5bn, according to bankers on the deal, who note the floating piece was reverse-inquiry driven and saw little oversubscription. Given the A+/Aa3 rating, the order book was dominated by high-grade accounts, the leads say. The dollar bond was heard bid up slightly in the gray late Wednesday. The 2015 dollar piece comes about 150bp-160bp back of the sovereign, which investors point out is in line with other EM A-rated bank spreads. One cites Korean Development Bank trading 180bp wide to Korea. The peso tranche comes 150bp-160bp wide to a 10-year global CLP benchmark issued by the sovereign in July, bankers on the deal say. The peso piece makes sense for the bank, investors say, as Chile’s local market, while large and liquid, prefers inflation-linked, and the trade is also likely cheaper on the swap. Santander probably saved 50bp-60bp versus dollars on the peso tranche before