After discovering scant interest among investors, Chile’s Santander Securitizadora has buried plans to issue a bond backed by time deposits. “There wasn’t enough interest, so they decided to kill the deal,” said a source familiar with the transaction. The novel two-year bond was structured by Boston Securitizadora and would have marked the U.S. bank’s first venture into the domestic securitization market. The collateral were time deposits generated by Banco Santander, related to the issuing agency. It totaled Ps167 billion (US$235 million), a colossus by local standards. Standard & Poor’s affiliate Feller Rate and Fitch Ratings had rated the deal AA+’ on the national scale. The deal was designed to bypass regulations limiting pension fund’s holding on any single entity. Since Banco Santander acquired Banco Santiago last year, the Spanish bank has ballooned to become the second largest company in Chile. It now holds over a fourth of the domestic banking loans and deposits. As a result, pension funds have been pushing their limits on Santander exposure. Though the securitization would have trumped those rules, funds still expressed strong reservations about Santander risk as it was shopped about.
Meanwhile, in the housing sector, Securitizadora Security priced a 1.1 million inflation indexed units (UF) (US$26 million) deal in late December. Backed by residential housing lease contracts, a senior piece worth 950,000 UF (US$22 million) yielded a real 6.68% and was rated AA’ on the national scale by Moody’s Investors Service affiliate Humphreys and Feller. The spread came out 150 basis points over 20-year PRC treasuries. “We would have liked a lower spread, but the reference rate is still extraordinarily low,” said Juan Crocco, CEO of the securitizing agency. The final legal maturity is 23 years, while the duration is ten years. Inmobiliaria Mapsa is the originator. The average weighted interest rate on the collateral is 10.79% and the outstanding volume on the contracts is 785,654 UF. The bulk of the transaction went to insurance companies, with a smattering of other investors buying into the rest.
