Thanks to a trio of domestic deals since the end of July, Chile kept moving when activity ground to a halt elsewhere. Two transactions sprang from the housing sector, which would typically be a yawn in a market where real estate structures are firmly established and account for the lion's share of outstanding securitization volume. But this time the dull hearth of the industry produced an eye-popper, at least by local standards. On Aug. 29, local structurer BCI Securitizadora closed a deal totaling 3.84 million inflation-indexed units (UF) (US$95 million), the largest ever in the housing sector. Senior tranches amounting to 3.77 million UF (US$93 million) priced at 6%, somewhat wide of comparable deals in the ratings category, which was AA' on the national scale by Standard & Poor's affiliate Feller Rate and Moody's Investors Service affiliate Humphreys. The heft of the deal probably pressured pricing, according to one investor. The average yield on the collateral is 8.08%.

With an average life of six years and final legal maturity of slightly over 19, the transaction was backed by mortgages originated by Banco Santander, which recently ballooned into the country's largest private bank upon merging with Banco Santiago. Apart from its stellar size, the transaction marked the first time this originator has sold mortgages for securitization. Legal counsel was Guerrero, Olivos, Novoa y Errazuriz.

Although of underwhelming size, another MBS that priced on Aug. 26 offered its own novelty as the first securitization play in Chile by a unit of FleetBoston. Boston Securitizadora issued a bond backed by housing leases, sized at 512,000 UF (US$13 million). Totaling a combined 474,000 UF (US$12 million), two senior tranches yielded 6.47%. The transaction priced appreciably wide of others carrying the AA' stamp given by Humphreys and Feller. One reason thrown around was that the BCI deal, pricing only days later, stole some of Boston's thunder. One investor that stayed out said the underlying contracts, originated by leasing provider Concreces, had a geographic dispersion outside of the Santiago metropolitan area that made him nervous. "We just don't have the same kind of background on the sector in the provinces," he said. Another investor, who did bite, said the spread proved irresistible, at more than 250 basis points over Chilean treasuries.

Prior to the above deals, Santander Securitizadora came out with its second bond backed by future payments from a government ministry to a public works company. The transaction carried four series divided into two maturities. A 3.75-year A series sized at 595,000 UF (US$15 million) yielded 3.64%, while a 4.75-year B-series totaling 655,000 UF (US$16 million) yielded 4.18%. That put the deal slightly tight to the first one (for structure details see ASR 2/10, p.22). The issuance date was July 31.

Finally, at press time, Securitizadora Security had just registered a small deal in the real estate sector. The originator is Penta and the volume stands at 340,000 UF (US$8.5 million). A 320,000 UF (US$8.0 million) senior tranche is expected to secure ratings of AA' by Fitch Ratings and Feller, according to a source close to the transaction. The arranger plans to strike around mid-October. The last time Security visited the market was in December, with a 1.1 million UF (US$27 million) transaction backed by housing lease contracts (see ASR 1/13, p. 19).

http://www.asreport.com

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