Bladex to Swap UF Bonds to Dollars

Panama-based trade finance bank Bladex intends to swap the UF funds into dollars, treasury vice president Gregory Testerman tells LatinFinance. The bank has been expected to issue up to UF2.5m ($109m) in bonds in Chile. Testerman says that issuance could take place any day given strong investor demand. However, the bank is waiting for the best conditions for the swap to finally issue the bonds. Earlier this month, the Chilean central bank announced it would intervene in the market to control the appreciation of the CLP. The move caused the cost of swapping UF to USD to rise about 50bp, according to Milciades Denis, Bladex’s head of treasury. According to Denis, Bladex did not issue last year because the bank already had the necessary funds to cover mid-term financing operations. Conditions have improved since the central bank’s intervention, with the cost coming down by about 15bp, he says. Denis declines to disclose the total cost he expects for the issue, which include a 3-year and 5-year tranche. Issuing in UF is a better option for the bank than issuing in CLP, because UF enjoys more investor demand and provides access to longer tenors according to Denis. He adds that the cost of issuing directly in dollars is around 15bp-20bp higher than issuing in UF and then swapping to dollars. BBVA is leading the sale, which should be the first huaso of the year. Denis also notes that Bladex has registered a bond issue in Peru, but that there are no plans to issue there yet, as pricing is not as attractive as in Chile. A Peru issue would be run by Interbank.