Brazilians Consider Huaso Issuance

Attractive funding costs may mean the time is right for Brazilians to issue in the Chilean domestic bond markets, according to bankers active in the market. BTG Pactual is one name in particular heard to have been at least bouncing the idea off investors recently. A spokeswoman for BTG, who last year entered Chile through the purchase of Celfin, declined to comment on this possibility. Broadly, conversation around whether now is a good time to issue “huaso” bonds – as issuance from foreigners has come to be called – has emerged, as the Chilean market is now attractive for shorter tenors. Optimists had expected a thriving market for issuers from other countries in LatAm to use the mature and experienced Chilean markets, but so far only Mexico’s America Movil and Peru’s BCP have printed. “You issue a huaso bond in UF and swap it to dollars, you can swap it cheaper than the deal you would get if you go to finance it in the international market,” says Juan Andres Fontaine, vp in capital markets at Celfin, about the possibility of huaso bonds seeing more interest in tougher times. Regulatory changes designed to lure a broader range of foreign borrowers, including lower grade credits, into the huaso arena have failed to take off so far. One main consideration, say sources, has been cost, given the overall attractiveness of borrowing in dollars.