Banco de Chile sold its third Swiss franc bond Thursday,
raising 125 million francs ($133 million) in a move that
extends a shift by Latin borrowers out of the dollar bond
market as fears grow over mounting volatility.
"Despite living in a time when the markets have shown a high
level of volatility, and where there have been virtually no
debt placements, Banco de Chile continues to issue," said
Sergio Karlezi, the bank's treasurer.
The Aa3/A+ rated
Banco de Chile priced the 2017 bond at 99.777 with a 1.125%
coupon to yield 1.182% or 60 basis points over mid-swaps.
BNP Paribas and Deutsche Bank managed the deal.
The bank is the first non-sovereign borrower to tap Swiss
francs since the June 19 US Federal Open Markets Committee
(FOMC) meeting, when the Federal Reserve signaled an end to its
$85 billion monthly quantitative easing (QE) policy, pushing up
Earlier this month, Banco de Chile priced a 225 million
Swiss franc floating rate note due 2016, to yield 3-month Libor
plus 60bp. In May, it added 50 million Swiss francs to its 2018
bond, bringing the size to 250 million francs. It also
privately placed a 10-year, 700 million Hong Kong dollar ($90
million) bond in April.
Banco de Chile says it will continue opening new markets,
having sold bonds in Hong Kong, Mexico, Peru, Switzerland and
Latin borrowers have raised a record $1.77
billion-equivalent from 10 Swiss franc-denominated
transactions this year through June 28, according to Dealogic
data. This beats the $1.44 billion from six deals sold in whole
Since 2010, issuance in the currency by Latin borrowers has
averaged roughly $1 billion, after just a trickle in the
"Swiss francs have started to feature on the radar screen of
more clients, where in the past we had one or two clients
actively following the market," said Sabeen Munir, director for
Swiss DCM and responsible for Swiss franc issuance out of Latin
America at Credit Suisse.
LatAm represents about 35% of emerging market issuance in
Swiss francs so far this year, compared to 20% last year, Munir
said. The market remains mostly open for borrowers rated
triple-B and up.
Brazil's Banco Pine, rated Ba3/BB+, indicated plans to raise
100 million Swiss francs earlier this year, but abandoned them
in June. But analysts the market could be open for some
high-yield borrowers, possibly including Brazil's Embraer.
Banco de Chile hits Swiss triple
Swiss franc bonds: Taking comfort