Banco de Credito del Perú

In our report yesterday, we said we believed the new issue from Banco de Credito del Peru (BCP) in Peruvian soles (PEN) was attractive at the price guidance given of 4.9%, given the high quality of the credit. Compare this bond with the bank's U.S. dollar-denominated US$716.301mn 4.25% senior unsecured bond due 2023, which trades at cUS$105.778 (ALLQ) to yield c2.53% (g-spread 83bps; z-spread 87bps) and has a duration of 3.27 years. In our opinion, the +200bps differential more than compensates investors for the (limited) currency risk. We do not have a recommendation on BCP.

As we reported on 29 August, Peru's Banco de Credito del Peru (BCP) was expected to come to the bond market with USD and Peruvian sol (PEN) deals. On 6 September, BCP issued its US$700mn (upsized from US$500mn) U.S. dollar bond due 2025 at a re-offer price of US$99.913 to yield 2.718% or T + 130bps. In this case, and since the issue is set to be in PEN, the proceeds are expected to be used to refinance BCP's PEN2.0bn 4.850% notes due 2020 (Baa1/BBB+/BBB+), which trade at cPEN101.583 to yield c3.37%, for a g-spread of 117bps and an i-spread of -1.4bps. The payment of the issue price of the notes will be made in U.S. dollars based on an exchange rate of PEN3.3426 per US$1.00.

Peru's Banco de Credito del Peru (BCP) is expected to come to the bond market with USD and PEN deals. The bank's roadshow will take place on on 29 August-5 September. No details have been given regarding size, tenor or initial price guidance. However, these issues coincide with BCP's tender offer for its outstanding US$800mn 5.375% bonds due 2020 (Baa1/BBB+/BBB+), which trade at cUS$103.544 (ALLQ) to yield c1.90% (to worst) for a g-spread of 18bps and a z-spread of 14bps. Its US$200mn 5.35% subordinated bonds due 2029 trade at cUS$100.396 (ALLQ) to yield 5.26% (to call) for a g-spread of 385bps and an i-spread of 392bps.