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Peru’s BanBif Seeks to Offer $400 Million of Bonds in 2013

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Nov. 19 (Bloomberg) -- Banco Interamericano de Finanzas SA, the Peruvian lender also known as BanBif, plans to sell as much as $400 million in bonds next year to finance an expansion in microfinance loans, Chief Executive Officer Juan Ignacio de la Vega said.

“There’s enormous potential in Peru as 75 percent of the 2.5 million small and medium-size companies here don’t have access to bank financing,” de la Vega said while attending the Latin American Banking Federation’s general assembly in Lima yesterday. “The bank’s bond program has always been oversubscribed by three or four times the debt offering.”

Banks including Scotiabank, Banco Compartamos SA, Banco de Credito and Mibanco have increased microfinance loans as corporate lending slows. Banks are focusing on personal loans amid a consumer boom in Peru that is fueling the fastest growth in South America, BBVA Banco Continental SA’s Chief Executive Officer Eduardo Torres-Llosa said in an Oct. 31 interview.

Peruvian bank loans in the first nine months of the year rose 13 percent to 140 billion soles ($54 billion) from the same period a year earlier, according to the Peruvian Banking Association. Lending to microenterprise and small companies accounted for 10 percent of total lending.

Microenterprise is expanding fastest in the retail and agricultural-export industries, de la Vega said. The category includes companies that employ 10 or fewer workers and accounts for 42 percent of Peru’s $180 billion gross domestic product and 60 percent of the country’s workforce, he said.

‘Profitable’

Microfinance clients in Latin America have “weathered” the international financial crisis and have “high” repayment rates, said Michael Schlein, chief executive officer of Accion International Inc., a shareholder in microlenders in India, Latin America and the Caribbean. Accion last week sold a controlling stake in Accion’s microfinance equity fund to Luxembourg-based Bamboo Finance SRL for $105 million.

“If operated well, microfinance can be profitable,” Schlein said today in a telephone interview from Boston. “Rural areas in Latin America in particular remain underserved, and we have to tap capital markets to finance that.”

Microfinance agencies in Latin America, which manage a total $34.6 billion in assets, have lent $27.9 billion to 18.3 million clients, according to Washington-based research consultants MixMarket.

BanBif’s bad loans ratio is 1 percent of its portfolio, compared with 1.75 percent for Peru’s banking industry, according to de la Vega.

“Peru’s ratio has been rising gradually as the situation is complicated in Europe and the U.S.,” he said. “But 1.75 percent is still pretty low compared with Europe.”

IPO Possible

An initial public offering may be “an option in the future,” de la Vega said. While BanBif was listed on the Lima Stock Exchange in 2004, it doesn’t trade.

Carvajal Empaques SA, Petroperu SA, Pesquera Diamante SA and Avicola San Fernando SA plan IPOs to tap growing demand for assets from institutional investors such as Peru’s four private pension funds, which manage a total $34 billion.

Peruvian corporate bond sales rose to a record $3.5 billion this year, led by Southern Copper Corp. and Volcan Cia. Minera SAA, which sold $1.5 billion and $600 million in bonds, according to data compiled by Bloomberg.

To contact the reporter on this story: Alex Emery in Lima at aemery1@bloomberg.net

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