LatinFinance - July 2013 - 18

Swiss franc bonds

18 LatinFinance

July 2013

multiple trades – and more cheaply than
two to three dollar issues.
This is not to say the Swiss market can’t
be tapped for size. Russian Railways sold
a 675 million Swiss franc deal in January.
For LatAm issuers to date, however, dollars
have offered better-value large deals.
Some repeat LatAm issuers have
revisited the Swiss market to build up
significant volumes. CAF has 1.7 billion
Swiss francs outstanding, for example.

Room for a few more?

Though this year’s increase in volume
is substantial, it is coming from almost
nothing just six years ago. Getting Latin
issuers to look at the Swiss franc market

2013* (9)

2011 (5)

2010 (4)

2009 (3)

2008 (2)

2007 (0)

2005 (1)

For buyers, the drivers
600
sound familiar to those
400
looking at the world’s other
bonds markets: rates are
200
low, and spread is needed.
0
“You have rates at
historical lows and the
Swiss national bank
seemingly not willing to
*Through June 15
increase rates,” says JeanSource: Dealogic
Dominique Bütikofer, head
of EM fixed-income asset
management at Union Bancaire Privée.
“And for foreign issuers, they are looking
for stability in the Swiss franc.”
Bütikofer adds that more LatAm and
triple-B rated credits, such as CAF and
Brazil’s BNDES, have entered the Swiss
bond index, generating investor attention.
“For issuers looking for small sizes it
is a very good source of funding because
the cost of doing a small deal in the dollar
market is sometimes too cumbersome to be
worthwhile,” says Sabeen Munir, director
for Swiss DCM and responsible for Swiss
franc issuance out of Latin America at
Credit Suisse. “But even for issuers looking
that have larger funding needs overall,
Swiss francs has proved to be an attractive

2006 (0)

800

Within the limits

remains tough for bankers, although the
pipeline is growing. The process of getting
investors to notice has also improved.
“Swiss francs have started to feature on
the radar screen of more clients, where in
the past we had one or two clients actively
following the market,” Munir says.
LatAm represents about 35% of
emerging market issuance in Swiss francs
so far this year, Munir says, compared
to 20% last year. As this year’s issuer list
suggests, the market remains mostly open
for borrowers rated triple-B and up.
Brazil’s Banco Pine, rated Ba3/BB+,
indicated plans to raise
perhaps 100 million Swiss
francs earlier this year. It
abandoned them in June,
citing internal reasons,
according to market
participants. This is not to
say well-recognized highyield borrowers – Brazil’s
Embraer might be such an
example – couldn’t have
access. “Name recognition
is the key,” Bütikofer
says. “If you look at issues
where the name hasn’t
been well-known, then the
performance hasn’t been
that strong.”
Kunz says emerging
markets debt still only makes
up two to three percent of
Swiss institutional investors
holdings, so there is room to
grow. The region’s economic
expansion has lifted credit
ratings and presented more candidates.
Munir says there is nothing about the
execution of Banco de Chile’s deal that
differentiated it as an emerging markets
borrower – a big step from distribution
efforts four years ago. Investors in the
past would have a lot more questions and
more credit work, and there was no way
an issuer would come to market without a
physical roadshow.
“This time there was nothing that
distinguished this transaction from any
double-A bank anywhere else in the
world,” Munir says. “There was no physical
roadshow and no concerns whatsoever
about the borrower coming from an EM
country.” LF

2012 (6)

source of funding.”
ever spread, in its fourth Swiss sale. The
Obviously, dollars are the market for
telecom reopened its 1.125%-coupon bond
large sizes. The ability to do smaller deals
to yield 0.917%, or mid-swaps plus 47
is in fact part of the selling point, with
basis points.
bankers touting a simple documentation
Over 50 accounts participated, adding
300 million francs to the bond and making process. An issuer doesn’t need a program,
for example, and can do a standalone deal,
it the second-largest from a LatAm issuer
as was the case with Banco de Chile.
in the currency after a 350 million Swiss
The process can be less expensive,
franc Pemex sale done in 2009, according
Munir says, even for big issuers. América
to Dealogic.
Móvil, for example, may not do a single
“If you want to issue five-year paper
[for us] nothing would beat Switzerland,” deal that matches the size of one of its
América Móvil CFO Carlos García Moreno dollar transactions. But over 12 months,
it can raise a substantial size through
says. He adds that five to six years is the
most efficient spot on the
curve, because of the large
Bigger than ever
retail bid.
LatAm Issuance in Swiss Francs ($m)
Other issuers in the
1,800
Swiss market this year have
included Santander Chile,
1,600
Corporación Andina de
1,400
Fomento (CAF) and the
Central American Bank
1,200
for Economic Integration
1,000
(Cabei).
LatinFinance - July 2013

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