BancoEstado likely to issue US$272mn in bonds in H2 - executive

Chile's state-owned BancoEstado will likely issue up to 6mn UF - the country's inflation-linked unit (130bn pesos or US$272mn) - worth of up to 35-year subordinated bonds locally in this year's second half, Jorge Ramírez, head of the bank's stockbroker unit, told BNamericas. "We haven't decided on a specific date yet. We will do it when it's commercially and financially convenient," he said. Proceeds from the issue will be used to strengthen the bank's capital base and to finance its projected loan growth, especially in the mortgage segment, Ramírez said. The bank's third line of subordinated bonds will be issued in three tranches of 2mn UFs each, and at an annual interest rate of 4%. The upcoming bond issue were rated AA by Fitch and AA+ by Feller Rate. The last time the bank tapped the local debt market was in June 2010, when it sold 3mn UFs worth of 28-year subordinated bonds on the Santiago stock exchange. The I2 series bonds were sold with a 3.74% coupon, or 32 basis points above the comparable central bank paper. BancoEstado is Chile's third largest bank.