Bankers eagerly await new debt placements by big banks in 2011

Friday, April 1, 2011

International bankers are eagerly waiting for large Chilean banks such as Santander Chile (NYSE: SAN) and state-owned BancoEstado to return to foreign debt markets in 2011, given successful placements carried out last year.

These issues are expected to happen sooner rather than later this year, given an environment of rising interest rates, which will push up the cost of issuing debt over the next few months, bankers told BNamericas at the sidelines of the recent IDB annual meeting in Calgary, Canada.


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After six years, Chile's government returned to the international bond market in 2010 with a US$1.52bn issue that allowed several corporations and banks to follow suit.

In September, BancoEstado placed a 10-year US$500mn bullet bond in the US, European and Asian markets with a yield of 170 basis points over the US treasury's benchmark rate. Investor demand hit 3.5 times the amount offered.

"The rate at which it was sold and the high demand are clear signs that another placement abroad will be well received by the market," one banker said.

Santander Chile recently registered a US$5.5bn medium-term bond program that will enable the bank to issue debt at any size, currency and maturity in the future. The bank filed an application for the notes to be admitted to trade on the Luxembourg stock exchange market.

Both companies carried out several meetings with bankers and received proposals from possible bond bookrunners and lead arrangers in Calgary, another banker said.

Santander Chile, the country's largest bank, sold US$1.2bn in bonds abroad in September, of which some US$500mn were denominated in pesos, the first time a Chilean corporate has issued debt abroad in local currency.

Two months later, the bank raised bonds worth 350mn Swiss francs (US$350mn) in Switzerland and in January this year sold US$500mn in floating rate senior bonds due 2016 on the US market.