Chile Readies Local Bond Sales

Facing an increased fiscal deficit outlook, Chile plans to sell $1.7bn worth of sovereign debt on the domestic market, and withdraw $4.0bn from its FEES sovereign fund, the finance ministry says. The $1.7bn issue will include 5-year peso-denominated bonds and 5 and 10-year UF-denominated bonds. Chile also took out $4bn in January to finance a fiscal stimulus package, and will change it into CLP at the rate of $40m per day beginning July 1. In addition, central bank will make room for the sovereign bond issues by suspending some of its own bond program and buying back 5 and 10-year central bank notes for up to $1 billion. Chile’s government faces a deficit of 4.1% of GDP, compared to 2.9% estimate in January.