Chile’s Corp Group Missed Debt Ratio on Corpbanca Rout

(Corrects story originally published Nov. 18 to remove reference to asset sales in first and third paragraphs.)

Corp Group Banking SA, one of the holding companies through which billionaire Alvaro Saieh controls lender Corpbanca, said a key debt ratio fell to a level that bars it from taking on new debt.

Corp Group Banking reported a collateralization ratio of 1.42 at the end of the third quarter for $500 million of dollar bonds due in 2023, below a minimum requirement of 1.75, according to a filing posted today on the website of Chile’s securities regulator. The ratio measures total unconsolidated assets, which reached 348 billion pesos ($672 million) at the end of the period, divided by unguaranteed debt, which stood at 245 billion pesos, the filing says.

Corp Group is restricted from certain kinds of new debt while the ratio is below 1.75, according to the prospectus of the bonds sold in January. The breach also restricts payments to its controller, today’s filing said.

An press relations office that represents Corp Group didn’t immediately respond to a call for comment.

Corp Group’s main asset is a 45 percent stake in Corpbanca, Chile’s fifth-largest lender by assets. Corpbanca shares fell 12 percent from July 11 to Aug. 28, after SMU SA, which is also controlled by Saieh, announced a breach of debt covenants and a restatement of first quarter earnings.

The shares, which ended the third quarter at 5.40 pesos, have increased 20 percent since then to 6.48 pesos.

To contact the reporters on this story: Eduardo Thomson in Santiago at ethomson1@bloomberg.net; Sebastian Boyd in Santiago at sboyd9@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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