EM Swiss surge takes up slack in dollar market
By Paul Kilby
NEW YORK, March 7 (IFR) - The flood of Chilean Swiss franc bank deals may be reaching a saturation point, but there is room for other Latin credits seeking arbitrage advantages and diversity in a market still offering attractive pricing versus dollar and local currency funding.
At a time when the dollar sector has come to a virtual standstill, Swiss franc deals continue unabated with Chile's Banco BICE becoming the latest Latin American credit to join the queue as it prepares to debut in the currency after mandating Deutsche Bank and UBS.
This year has already seen Latin American borrowers raise CHF1.4bn (USD1.57bn) in the currency and more could be on the way if cost advantages remain in issuers' favour.
Chilean banks have largely taken centre-stage, partly due to the country's single A rating - the highest in Latin America. This brings greater comfort levels to conservative investors seeking a pick-up to European comps.
For instance, Santander Chile, rated Aa3 by Moody's and A+ by Fitch, raised CHF300m in January through a 3.5-year at mid-swaps plus 68bp that still looks alluring against the 40bp-45bp on bonds issued by similarly rated French banks.
"Investors recognized Santander in the name, but it was from Chile, which, on a sovereign level, has a high rating and its economy is doing well," said Slaven Maligec, head of Swiss syndicate at BNP Paribas. "I doubt Santander Spain could achieve this pricing and size."
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