As the Southern Hemisphere's high summer looms, Chilean investors are warming up to credit card deals. Over the last month, the securitization arm of Banco de Credito e Inversiones has brought to market the only two bonds ever done in the sector and noticed a sunny trend. Though rated lower, their second deal priced tight to the first one.

"The market didn't know about the sector then and they're getting very comfortable, very fast," said Gerardo Spoerer, chief executive officer of BCI Securitizadora.

The senior piece on the most recent deal, La Polar, priced at 7.15% on Dec. 9, while its predecessor, Ripley, yielded 7.3% in early November (see ASR 11/25, p.17). There has been a drop of roughly 20 basis points in comparable rates since then and the latter deal was less than half the first one in size, but those factors should have been cancelled out by Ripley's leg-up of two ratings notches. Standard & Poor's affiliate Feller Rate and Fitch Ratings gave Polar's senior tranche a national scale rating of AA'; Ripley's, meanwhile, enjoys AAA' from Feller and Moody's Investors Service affiliate Humphreys.

La Polar had a bid-to-offer ratio of 1.3x. Sized at Ps15.25 billion (US$21.9 million), the senior tranche went to pension funds, banks and mutual funds. The credit card originator took the C' rated, 9.75 billion (US$14.0 million) subordinated tranche, which provides a 39% enhancement on the senior portion. The deal's senior piece has an expected maturity of three years, with quarterly payments.

Collateral is comprised of 215,000 private label credit card accounts generated by the La Polar card. The card is issued by an eponymous department store that targets lower middle-class consumers. La Polar's downmarket darlings are heavy users of the card. Some 62% of the department stores sales are plastic.

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