NEW YORK, Feb 28 (IFR) - Goldman Sachs has filed a 50-year
shelf with Chilean regulators to issue up to USD965m
equivalent in bonds to local investors - the first-ever such
offer from the US investment banking giant.
The move could boost the local Huaso market, which has
floundered in recent years. A source with knowledge of the
transaction expects a shorter maturity than 50 years.
Goldman Sachs has raised about USD300m equivalent
in Chilean pesos in the global markets since 2006, but it has
never before issued a so-called Huaso bond in the local market.
The proposed bond is "consistent with our desire to play a
constructive role in the development of Chilean capital markets
and to further diversify our investor base," a spokesman said.
He said the bank was also considering opening an office in
Chile, and that the Huaso program was a way to further the
bank's presence in the country.
Chile has one of the deepest local capital markets in the
region and has been seen as an ideal stomping ground for other
Latin American borrowers.
According to one banker, Chilean investors now have between
USD300m-USD350m of assets under management.
But despite its potential, the Huaso market has only
developed in fits and starts since telecom America Movil open
this space in 2009 after years of leaping regulatory hurdles.
Only a handful of borrowers have tapped this asset class
since then, despite regulatory changes to broaden the borrower
In some cases, it has been a matter of cost given the
relatively shallow but deepening swaps market.
In 2011 regional development bank Bladex postponed its
UF2.5m (USD108m) local bond after higher cross-currency swap
rates made the transaction less attractive.
This past December, however, Brazil's Banco Pine
priced a UF1.5m (USD72m) 6% senior unsecured 5-year to yield
6.75%, coming inside initial price expectations of around
This was the first time that a Brazilian issuer sold Huaso
Earlier in 2012, Mexican homebuilder Corporacion Geo
also sold a Huaso bond, but in an extremely small
A Mexican homebuilder and a mid-tier Brazilian bank may not
have been ideal credits to revive the Huaso market, as investors
have cast a wary eye on both sectors in recent years. Indeed, in
Banco Pine's case, pension funds were not the main drivers of
the trade, as they normally are in Chile.
Instead, the deal attracted insurance companies, mutual
funds, banks and family offices that have fewer opportunities to
add foreign names to their portfolios (especially paper
denominated in inflation-linked UFs).
Chilean investors have also been unwilling to venture too
far down the credit spectrum after the accounting scandal at
local retailer La Polar in 2011 shook confidence.
"La Polar changed risk perception of many pension funds,"
said a banker last year.