The securitization arm of Chile’s Banco Bice expects to go out with its second placement of paper backed by globals from Empresa Nacional de Electricidad (Endesa Chile) before mid September, said a source familiar with the transaction. The deal is denominated in inflation-indexed units (UF), while the asset is a 7.75% dollar-denominated 08. The size of the issue is 750,000 UF (US$17.5 million). “It’s already cleared regulators and now it’s being considered by the (official) risk classification agency,” the source said. Domestic bonds receive their final stamp of approval from the risk classification agency, which assesses the mandated two ratings attached to each deal. Bice’s bond is rated AA’ on the national scale by Moody’s Investors Service affiliate Humphreys and Fitch.
This will mark Bice’s second issue of UF bonds backed by Endesa Chile’s 08s. The first came out in early May and priced at a real 6.18%. Though domestic interest rates have fallen since then as the Central Bank clings to a lax monetary policy, Bice’s deal may not automatically reap the benefits. One of the reasons is investor nervousness over Endesa Chile’s prospects, given its exposure to other Latin American countries. Though the impending securitization has the same double-A national-scale rating as the original deal, investors are finding it tough to ignore the widened spread on Endesa Chile’s globals. Over the last three months, Endesa Chile’s bonds have flared out roughly 250 to 275 basis points to 450 to 475 basis points over Treasurys, according to one New York-based corporate EM trader. “It’s a function of the Lat-Am trouble in general,” he said. There are US$400 million outstanding of Endesa Chile’s 7.75% 08s.