Chile’s Banco Santander is back in the market with a bond packing government risk, according to a source familiar with the deal. Sized at 1.27 million inflation-indexed units (UF) (US$30 million), the transaction will be backed by future payments to a public works company from the Ministry of Public Works (MOP), an asset Santander introduced in January. Like its predecessor, the upcoming transaction will be divvied up into different maturities to match the timing of the government’s payments.

The tranches in the inaugural placement for this sector priced at between 2.8% and 4.5% on an inflation-indexed basis. At that time, MOP faced bribery accusations against some of its officials as part of a wider financial-government scandal. Institutional investors could have snubbed the deal, but in the end they bought in, mollified by the ministry’s impeccable record in making payments. Concerns of malfeasance are unlikely to dog the second transaction, as the scandal has died down in the last several weeks with the resignation of prominent public officials in the economic arena.

Though they have yet to put out releases on the deal, on their respective websites Fitch Ratings and Standard & Poor's unit Feller Rate have the upcoming Santander transaction at triple-A on the national scale.

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