Chilean structurer Securitizadora Bice is readying the second ever dollar-denominated transaction in the domestic securitization market. Sized at US$50 million, the deal is a six-year bullet. The paper is a perfect mirror of the collateral, which is comprised of notes to be issued by Societe Generale Option Europe (SGOE) under the Luxembourg Stock Exchange. The deal is slated for June, according to a source familiar with the transaction. The coupon is fixed at 0%, with the final yield indexed to the return of the PRS Fund V during the same time frame. Companies related to Societe Generale manage the fund, which engages in unconventional investments, according a press release by Standard & Poor’s affiliate Feller Rate.
Apart from structuring and issuing the transaction, Bice will be primary servicer. Securitizers in Chile often take on all three roles, particularly when the structure is uncomplicated. Feller Rate and Moody’s Investors Service affiliate Humphreys have both rated the transaction AAA’ on the national scale, largely due to the fact that the notes will be guaranteed by Societe Generale, rated AA-’ and Aa3’ on the global scale.
Bice is no stranger to securitizing paper from overseas. In the past couple of years, the structurer has crafted structures in the domestic market backed by dollar-denominated global bonds issued by Chilean blue-chips Empresa Nacional de Electricidad (Endesa) and its parent company Enersis. Those deals have recently met trouble as rating agencies have either downgraded or issued negative credit watches on the underlying collateral. Humphreys cut the securitized deals to A-’ from AA’ on the national scale after Moody’s dunked the global currency rating of Endesa and Enersis by two notches. Fitch Ratings have both the securitized deals and the underlying collateral on creditwatch.
A source close to the upcoming deal said the transaction is considerably safer than its predecessor given that Societe General’s rating is a few notches higher than Chile. “Even if (the collateral) went down two notches, the deal would still rate triple-A locally,” the source said. Another difference between the new deal and the outstanding securitizations of cross-border paper is that the latter are denominated in inflation-indexed units (UF) and thereby entailed currency hedging.