Category: Chile

Peru’s Wong is selling its stake in Chilean retailer Cencosud, according to a regulatory filing. The planned auction of 49.75m shares would bring in CLP91.64bn ($170m) at Wednesday’s price. Wong acquired the shares – equal to a 2.3% stake – when it sold its supermarket chain to Cencosud in 2007. It does not indicate when it plans to sell the shares. Cencosud closed Wednesday at CLP1,842, down 1.4% from the previous day.

Chile’s Banco Bice has sold UF3m ($124m) in 5-year local bonds with a 3.00% coupon to yield 3.23%, a spread of 82bp over the 5-year central bank bonds. The bank managed the AA rated issue itself. Banco Bice, founded in 1979, has about $500m in assets, according to information from the local bank regulator.

A positive rating action is a possibility for Chile, says Shelly Shetty, senior director of Fitch Ratings. “In the single A category, there is scope for Chile to move up,” Shetty tells LatinFinance. She notes that the sovereign’s debt-to-GDP ratio is low compared to the median of A rated countries. In addition, she says the scope to upgrade the sovereign above its existing A rating depends on president-elect Sebastian Pinera delivering on promises related to reforms in labor, as well as improvements in the country’s education sector. Another country she sees on a positive path is Panama, which she says has manageable financing needs but warns that its debt burden is higher than that of the BBB median. She expects Panama’s GDP to grow 4% in 2010, the highest rating in LatAm for the year. Uruguay, rated BB minus, also has a positive outlook due to its high liquidity. Shetty believes Uruguay will benefit from Brazil’s growth and positive FDI inflows this year. Suriname is also on a positive rating path, adds Shetty.

The Japan Bank for International Cooperation (JBIC) has signed a $245m loan for Chile’s Minera Los Pelambres to finance expansion. The lender says it is responding to a need from Japanese firms to secure a long-term and stable supply of resources. “In the face of pressure due to a sharp increase in copper concentrate demand in the People’s Republic of China and Republic of India, Japan is increasingly urged to secure copper concentrate,” says JBIC. It adds that it will keep providing financial support to facilitate the development and acquisition of strategically important resources through project structuring and risk-taking functions that draw on its various financial facilities. The borrower aims to boost capacity at the Pelambres copper mine by approximately 370,000 tons of concentrates annually, starting in Q1. Japanese firms will take delivery of approximately 180,000 tons from this increased portion. Los Pelambres is 60% owned by Antofagasta alongside Nippon Mining & Metals Co, Mitsubishi, Marubeni and Mitsui. In May, JBIC provided a loan for the Esperanza project, owned by Antofagasta (70%) and Marubeni (30%).

The Chilean unit of Spain’s Banco Santander has registered a 2014 UF3m ($127m) non-convertible bond issue with the local banking regulator. The AAA-rated bonds will pay 3.3%. Proceeds will be used to finance the bank’s mortgage loan portfolio, says a Santander spokesman. The Chilean bank itself is managing the sale, he adds.

A unit of Chile’s CorpGroup has acquired a 20% stake in telecom company VTR GlobalCom for CLP167bn ($333m) to be paid in cash in May, says Cristalchile, the seller. The sale will result in a profit of about CLP68bn, it adds. CorpGroup is a financial conglomerate controlled by Chilean businessman Alvaro Saieh. US-based Liberty Global, which controls 80% of VTR, last year offered to acquire the 20% stake for about $260m in cash or stocks. Local investment bank Celfin Capital had offered $323m. Both offers expired in November.

Chile’s finance ministry plans to sell $3bn equivalent in domestic bonds during H1 2010. It will do 2 issues a month from January 20 through June 23, including 5-year peso-denominated bonds totaling $768m and some $2.23bn in inflation-indexed bonds with maturities of 5, 10, 20 and 30 years. The amounts suggest a continued ability to avoid more costly cross-border financing. Chile – which has not issued a sovereign dollar bond in international markets since 2004 – flirted with the idea of external debt last year. Ultimately, it was able to finance its budget and a $4bn equivalent economic stimulus plan through local bond sales and a stabilization fund. Chile has not disclosed its local issuance plan for H2.

In line with market expectations, Chile’s central bank has left its monetary policy rate at 0.5% and says it expects to stay at this level at least until Q2. Morgan Stanley forecast that Chile’s central bank would leave the monetary policy rate on hold at 0.5% given perceived risks to growth outlook, muted inflation and stronger peso. “Amid muted inflationary pressures, a stronger exchange rate and ample slack in the economy, we think that the first rate hike is likely to be a third quarter event,” the shop says. Bank of America-Merrill Lynch meanwhile says hikes will start in 2Q. Chile’s central bank eased by 775bp between September 2008 and December 2009, and forecasts a 550bp hike between January 2009 and December 2011.

Chile’s Colbun has raised $500m, upsized from $400m, in its first dollar bond sale, pricing inside initial guidance. The power generator drew more than $2bn in orders, according to bankers on the sale. The BBB/BBB minus 2020 came at 98.973 with a 6.000% coupon to yield 6.139%, or UST plus 237.5bp, well inside 262.5bp area guidance. The bond was heard trading up 0.50-0.75 points in the gray Thursday afternoon. “It’s a first time issuer, but its an easy-to-follow company with strong shareholder support in a defensive market” says a participating EM investor. Despite the tightening, the buysider still calculated a tiny pickup, after adjusting for duration, to Endesa’s 2027 bond, which trades around 6.8%. A banker on the deal points to Colbun being in a defensive sector in a stable economy as driving demand and driving the upsize and tightening. About $250m of proceeds are expected to be used for cancelling outstanding debt and $150m to finance expansion, according to S&P. Citi and JPMorgan are managing the sale. Though this is the first cross-border issue for Colbun, the borrower has made extensive use of the bank and local bond markets. In 2008, it raised a $400m 5-year syndicated loan led by ABN, BBVA, Citi, Itau and Santander.