Category: Chile

Chile plans to meet US bond investors next week, ahead of a much-anticipated $1.5bn debt sale. It will begin in LA on Monday and hit Boston before finishing Wednesday in New York. The sovereign, raising funds to help with budgetary needs due to earthquake reparations, plans global 2020 bonds denominated in both dollars and pesos, according to regulatory documents. Its finance minister has flagged a sale of $1bn in USD bonds and a $500m debut in global pesos. Citi, HSBC and JPMorgan are leading the deal, Chile’s first in dollar markets since 2004. Chile is rated A1/A/A+.

Chilean asset management firm LarrainVial says it has been granted an AMP2 rating by S&P, which it claims makes it the first Chilean company of its kind to obtain an international credit rating. S&P says the grade reflects a good competitive position with an adequate mix of products and clients, suitable operating procedures, sound managerial team, well-defined company strategy and investment objectives for each fund, as well as its operating in an environment of low political and regulatory risk. LarrainVial has more than $2.35bn in assets under management.

If Chile follows through with plans to issue a 10-year bond, the new issue would boost corporate access to international markets, says finance minister Felipe Larrian. “Absolutely, there would be a benefit to establishing a benchmark.” he told reporters in New York Friday. “In Chile there is not a benchmark for private sector bonds with the necessary liquidity and maturity.” He does not comment on the timing of a bond sale, expected by the market at some time in H2, noting that Chile would get competitive rates even if it were to issue later in 2010. “The markets are differentiating very significantly between EM economies that have responsible policies and are taking steps to have adequate fiscal policies,” Larrain says. He notes that Chile has lower spreads than Eurozone countries such as Spain, Portugal, Ireland and Greece. Chile said in April it is considering the sale $500m via a debut peso-denominated global bond issue, as well as $1bn in 10-year dollar bonds. Citi, HSBC and JPMorgan are heard as the leads. Larrain declines to confirm or deny the mandate. Larrain also says the government plans to send a new law to congress in the first half of next year to simplify and standardize the legal framework governing funds. This includes mutual funds, funds investing foreign capital, overseas venture capital and home savings. The changes should boost their investment abilities and help with Chile’s “export” of financial services, Larrain says.

In line with market expectations, Chile’s central bank has tightened the monetary policy rate by 50bp to 1.50%. The bank says the outlook for the local economy is favorable despite volatility in financial markets, caused by uncertainty in Europe. It also says copper and oil prices remain elevated. Bulltick, which had predicted a 50bp hike, says inflation has been relatively tame, rising 0.36% month-over-month in May and staying flat in June. Chile began the tightening process June 15 with a 50bp hike to 1.00%. Celfin says economic recovery in Chile is moving rapidly, both on the supply and demand side with expectations also improving. It project the central bank will lift the rate to 3.00% by the end of the year.

S&P has taken the BBB ratings on Petropower off CreditWatch negative after the February earthquake that hit Chile. It affirmed the Chile-based delayed coker facility and cogeneration project’s ratings and has them on stable outlook. “We consider that all the project agreements and protections in place should adequately protect bondholders until the facilities restore full operations,” the agency says.

Chile’s Grupo Phoenix and Danish renewable energy company Vestas Wind Systems are together investing $250m to finance the first stage of development of the Talinay Oriente wind farm. The unit is part of the Talinay wind farm and expected to generate 120MW. The Talinay wind farm as a whole is expected to become the largest of its kind in LatAm, generating 500MW and requiring an investment of over $1bn, according to Grupo Phoenix. Orlando Chacra, president of Phoenix, says in a statement that the wind farm will be developed in 5 stages. Once completed, it will have 243 wind turbines which should help eliminate 19m tons of carbon dioxide between 2011 and 2024.

Scotia Chile has issued 2 bonds for a total of UF3.5m ($138.6m) via Dutch auction. A UF2m bond due in 10 years priced at 100.63 with a 3.50% coupon to yield 3.45% and a UF1.5m deal due in 25 years priced at 104.86 with a 4.00% coupon to yield 3.73%. The bonds are rated AAA. Proceeds will be used to finance long-term assets. Scotia’s own brokerage in Chile, Scotia Sud Americano Corredores de Bolsa, handled the issue.

Scotia Chile says that today it will issue UF3.5m ($138.6m) in local bonds in 2 tranches via Dutch auction. A UF2.0m tranche will be due in 10 years and a UF1.5m tranche in 25 years. The bonds are rated AAA. Proceeds will be used for long-term lending. Scotia’s own brokerage in Chile, Scotia Sud Americano Corredores de Bolsa, will handle the issue.

Chile’s Coca-Cola Polar is planning to issue up to UF2.5m ($160m) in non-convertible bonds due in 10 years. IM Trust and Penta Corredores de Bolsa will manage the deal.

ATC Sitios de Chile, a subsidiary of American Tower Corporation (ATC), says it has launched operations in Chile. The company recently entered into agreements to purchase up to 287 wireless communication tower sites from Telefonica Chile. It purchased 113 of the tower sites, on which Telefonica, is the anchor tenant, at an initial closing on June 29. ATC expects to close on the remaining sites by the end of 2010, subject to closing conditions. “Our launch of operations in Chile extends our presence into a vibrant wireless market where recent spectrum auctions are expected to drive investment in network expansion by existing wireless carriers as well as new entrants,” says ATC CEO Jim Taiclet. “We will further leverage our existing regional operations as we continue to pursue opportunities for future expansion and investment,” he adds. ATC owns and operates communications sites in the US, Mexico, Brazil, Chile and India.