Chile’s local capital markets may have struggled of late, but the country’s blue-chip issuers are tapping global markets more frequently than they have in years. Against this backdrop, global banks have stepped up their capital raising and advisory efforts for Chilean issuers – perhaps none more so than JP Morgan, which wins the award for Investment Bank of the Year in Chile.
The global bank played key roles in a number of award-winning transactions over the past year, including a $2 billion bond issuance by state oil firm Codelco last January, a $600 million liability management transaction from state mining company Enap in July and the $500 million offering of perpetual notes by local bank BCI in February. All of them are DOTY winners in 2024.
JP Morgan also lead the investment banking league tables in Chile, according to Dealogic, with an 18% market share in net revenue and 15.5% in deal volume in the year ending September 30.
Andres Errazuriz, JP Morgan’s senior country officer for Chile says: “Local markets have been gaining momentum from a low base, with mainly blue-chip issuers testing the waters and market limits. Due to the unpredictability of local markets, Chilean issuers were more active in the US market for both ECM and DCM, with activity higher than average.”
He estimates that 14 Chilean issuers concluded 19 bond deals in 2024, totalling $18 billion– an unusually active year for Chile internationally and the second highest number since 2014.
Errazuriz notes that the breadth of companies that came to market included a range of sectors such as oil and gas, mining, industrials, airlines, power generation, retailers and financial institutions. The sovereign also made its presence felt with issuances including a $2.2 billion local social bond that broke new ground for sustainable placements in the region.
Corporate bond issuers strove to meet refinancing needs and capex plans drove corporate activity, while financial institutions used subordinated bonds for capital efficiency, he points out.
“Chilean issuers typically prefer high-grade 10-year senior unsecured bonds. This year, banks issued additional tier 1 capital subordinated bonds, and there were high-yield & high-grade secured bonds by companies like Latam and PEC,” Errazuriz says.
Equity markets were less dynamic, with some deals, such as the MallPlaza follow-on, driven by M&A activity. One of the most notable transactions was the re-IPO of airline company Latam in the ADR market.
Next year, Errazuriz expects DCM activity to stay flat, while the M&A pipeline is looking strong, with significant transactions across various industries.
“ECM activity is more project-dependent, and without new significant projects, issuers may not actively tap the market due to current valuations being below historical averages,” he points out.
But, as tends to be the case, domestic political factors combined with the external financial environment will have a bearing on which direction the Chilean market takes in the coming year.
With a presidential election approaching in November, Errazuriz says “it is challenging to predict the impact on capital markets in the latter half of 2025, though issuers with clear capital needs may focus on the first half.”
Still, frequent Chilean issuers in international markets “with a proven track record” will be more sensitive to global interest rates than the local political or economic situation, he adds.