Banco del Estado de Chile Prepares for Potential Sale of Dollar Bonds

Banco Estado, Chile's state-run lender, hires top banks to arrange investor calls for potential $1B AT1 dollar bond sale, aiming to diversify and strengthen its capital structure, attracting global investors.

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Mazhar Abbas
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Banco del Estado de Chile Prepares for Potential Sale of Dollar Bonds

Banco del Estado de Chile Prepares for Potential Sale of Dollar Bonds

Banco del Estado de Chile, the state-run lender known as Banco Estado, has hired a team of top global banks to arrange investor calls for the potential sale of Additional Tier 1 (AT1) dollar bonds. The banks hired include BNP Paribas, HSBC, JPMorgan Chase, Bank of America, Citigroup, Credit Agricole CIB, and Goldman Sachs. "The investor meetings are planned to commence on Tuesday," according to people familiar with the matter who requested anonymity as they are not authorized to speak publicly about it.

This move by Banco Estado is aimed at diversifying and strengthening its capital structure. The inaugural AT1 perpetual notes have received investment-grade ratings from S&P (BBB-) and Moody's (Baa3), reflecting the bank's financial stability. Fitch Ratings has also provided a national long-term rating of 'AA(cl)' to Banco Estado's perpetual bank bonds, which could amount to up to $1 billion (UF25m).

Banco Estado's decision to issue AT1 dollar bonds in the international market follows a similar bond sale by Chile's Banco de Credito e Inversiones, which sold $500 million of perpetual notes in February 2024. This issuance is a strategic step for Banco Estado to bolster its capital base in line with international banking standards and enhance its attractiveness to international investors.

Why this matters:

The hiring of major global banks to arrange investor calls and the strong credit ratings assigned to the potential bond issuance underscore Banco Estado's financial stability and the market's confidence in the bank's prospects. As the state-run lender prepares for this significant move, the outcome of the investor meetings and the subsequent bond sale will be closely watched by market participants and could set a precedent for future capital-raising activities by Chilean banks.

Key Takeaways

  • Banco Estado, Chile's state-run lender, plans to sell AT1 dollar bonds.
  • Banco Estado hired top global banks to arrange investor calls for the potential bond sale.
  • The AT1 perpetual notes have received investment-grade ratings from S&P and Moody's.
  • The bond sale aims to diversify and strengthen Banco Estado's capital structure.
  • The outcome of the investor meetings and bond sale will be closely watched.