BCI Dumps Dollars For Pesos

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.