The International Finance Corp yesterday priced its second bond denominated in Peruvian new soles.
The three year NS100m ($31m) bond pays a 6.27% coupon and was priced at 33bp through the Peruvian government yield curve.
The deal — dubbed an Inca bond — was arranged by Banco De Crédito. Credibolsa was placement agent, and JP Morgan was financial adviser to the IFC.
"The deal was distributed domestically through a Dutch auction system," said John Groesbeek, senior financial officer at the IFC in Washington. "It was more than twice oversubscribed and there were 15 investors."
The IFC opened its NS500m programme for domestic issuance in Peru in 2004 with a NS50m deal, then worth $14.4m. Credibolsa was bookrunner.
The funds will be swapped back to floating dollars. "After we engineer back-to-back swaps," said Nina Shapiro, vice president of finance and treasurer of the IFC in Washington, "the funding costs are about average. We could get better from MTNs, but we like to respond to client needs and not force back-to-back terms."
Earlier this year the IFC opened the Moroccan dirham bond market, and in 2002 it issued the first Colombian peso foreign bond, which it has since followed with several structured transactions.
As part of its mandate to promote private sector development, the IFC is committed to opening and developing capital markets, Lestocq Orman, from BNP Paribas' debt capital markets team, said this week.
"Another way this bond helps," Groesbeek said, "is by bringing another counterparty in the swap and hedge market."
As well as a domestic government curve, Peru has a growing corporate credit market, Groesbeek said.
"We are hoping and expecting that other borrowers will now come," said Shapiro. "And we are hoping we will be able to follow this deal in Peru with some structured products, as we did in Colombia."