BCP Lands Hybrid

Banco de Credito del Peru (BCP) generated about $1.4bn in orders for a new $350m Tier 2 2027 NC10 bond. The bank priced the Baa3/BBB minus fixed-to-floating rate subordinated notes at par with a 6.125% coupon to yield at the tight end of 6.25%-area guidance. After year 10, the interest rate switches to Libor plus an additional spread of at least 300bp. “It came at a good price,” says a banker away from the deal. In the end, the issuer managed to leave investors with a 12.5bp concession versus levels on BCP 2026s, at 5.90% yield to call, with 10bp added to adjust for the curve extension, according to bankers on the deal. “The deal came in too tight for us,” says a West Coast EM portfolio manager who saw a 20bp-25bp new issue concession. The paper was trading up at 0.25 points in the grey market, according to another investor. Demand was heard coming from a good mix of accounts from LatAm, the US and Europe, with some Asian participation. The fixed-to-floating rate structure was preferred as it allows for the bonds to be called without affecting BCP’s capital ratios, according to a banker on the deal. Proceeds are marked for general corporate purposes. Bank of America Merrill Lynch and Citi managed the 144A/RegS transaction. BCP in October 2011 engaged in a liability management transaction in which it mopped up most of its $120m outstanding in 6.95% 2021 subordinated bonds in exchange for 6.875% 2026 fixed-to-floating rate bonds. The exchange followed a September 2011 pricing of a $350m 15NC10 subordinated Tier 2 bond to yield 6.875%.