Nov. 9 (Bloomberg) -- Banco Santander Chile, the country’s biggest lender, sold $500 million of three-year bonds in its first overseas dollar issue in almost five years.

Santander Chile sold the bonds to yield 1.57 percentage points above U.S. Treasuries, according to Bloomberg data. Deutsche Bank AG, JPMorgan Chase & Co. and Banco Santander SA arranged the bond sale, said a person familiar with the offering. The Santiago-based bank will use proceeds of the sale for general corporate purposes, said the person, who declined to be identified because he’s not allowed to speak publicly.

Santander Chile, which last sold dollar bonds in December 2004, is tapping international debt markets as growing investor demand for emerging-market debt drives down borrowing costs. The yield on Santander Chile’s 5.375 percent bond maturing in 2014 has dropped to 4.09 percent from 7.61 percent on Jan. 30, according to Bloomberg data. The bond’s price climbed to 105.81 cents on the dollar from 89.61 cents during that period.

Fitch Ratings affirmed on Oct. 30 the A+ foreign- and local-currency rating of Santander Chile, which is controlled by Spain’s Banco Santander SA.

The rating reflects “the potential support from Spain’s Banco Santander given Banco Santander Chile’s strategic importance and integration with its parent, as well as its strong historical profitability, healthy asset quality, leading market share and good capital adequacy,” Fitch said in a statement.

Calls to Santander Chile spokeswoman Elke Schwarz weren’t immediately returned.

To contact the reporter on this story: Veronica Navarro Espinosa in New York at vespinosa@bloomberg.net

Last Updated: November 9, 2009 15:34 EST