Santander Chile lights way for LatAm in Tokyo pro-bond market
April 17, 2014
Chilean bank becomes first Latin American issuer to sell paper in pro-bond market
Santander Chile has become the first Latin American borrower to pursue the Tokyo pro-bond format, in a deal that could prompt other high-rated borrowers to follow suit.
|| Source: Kondo Atsushi
The bank sold a JPY27.3bn ($268m) bond in three tranches on Wednesday. The bonds were snatched up by Japanese investors, most of whom were understood to be long-term, buy-and-hold accounts.
Chile's AA rating in tandem with the bond's high rating of Aa3/A/A+ meant that the credit was an ideal candidate for the pro-bond market, a bond format launched in 2008 with the aim of making bond issuances more flexible by simplifying disclosure requirements.
"Borrowers with very strong investment grade ratings could follow suit and tap the pro-bond market … but slowly but surely, as this market grows and Japanese investors become more comfortable with certain risks, I'd think that strong BBB names should be able to access that market," said a market source.
The pro-bond offers a simpler issuing platform than the Samurai format, allowing issuers to register their financial data and the planned amount of bond issuances for a given year, according to the Tokyo Stock Exchange. After registration — which can be done in English — issuers can sell bonds up to the limit of the planned amount as and when required.
Santander Chile has been a very active issuer this year, raising $1.2bn in foreign markets, including in Swiss francs and US and Australian dollars, and buying back a europeso instrument, as it strives to diversify its investor base and takes advantage of windows of opportunity. The bank does not have concrete plans to borrow more in the foreign markets in the near future, a source said, although it could do so if it the right opportunity arises. LF