Category: Chile

Chile’s central bank has cut rates by 50bp to 1.75%. The bank says its decision is based on falling inflation, which stands at 5.00%. The bank says there is a possibility of further rate cuts. The rate of easing was in line with consensus. Bulltick Capital predicts easing to 1.25% by year-end. Bank of America-Merrill Lynch also believes the central bank will cut another 25bp in May.

Regional mobile telephone powerhouse America Movil will issue up to $144m equivalent in its first ever Chilean peso denominated bond issuance, says a senior company source. A 5-year deal through Banco de Chile is expected this month, and the final amount may be lower, depending on price. The issuer claims to be doing the first bond in this format for a foreign company directly in the Chilean market. America Movil, one of the most advanced LatAm corporate issuers, has a Chile unit it will finance with proceeds, and wants a more active presence in CLP. The deal comes from a 30-year $1.2bn program, provisionally rated A3 (stable) by Moody’s. The agency notes America Movil’s leading position in Mexico – with approximately 73% of the wireless market – as well as LatAm, where it has close to 183m subscribers, operating cash flow of $10bn in 2008 and low leverage of 1.1x debt/Ebitda last year.

Chilean generator AES Gener has sold $183m in 10-year dollar-denominated bonds on the domestic market. The 8.00% coupon notes priced at 96.76 to yield 8.50% and Celfin managed the transaction, rated A on a national scale. Gener will use proceeds to finance expansion and development of its commercial operations. The sale follows S&P’s revision Tuesday of the outlook on Gener’s BBB minus global rating to negative from stable. The agency says it is concerned about the generator’s increasing leverage – possibly to 3.5x debt to Ebitda this year, from 3.2x – used to finance intensive capex.

After a series of surprisingly large monetary policy rate cuts, Chile’s central bank is expected to ease by just 50bp Thursday. Bulltick Capital expects a half point reduction to 1.75% and predicts easing to 1.25% by year-end. Bank of America-Merrill Lynch also believes the central bank will cut 50bp this week, and another 25bp in May, taking the monetary policy rate to 1.50%. March 12, Chile cut 250bp to 2.25%. The previous month, it also did 250bp. Data coming out of Chile has not been positive. Economic growth collapsed in February, posting a 3.9% drop year-over-year, versus an expected 3.3% decline. Industrial production fell 11.5% in February year-over-year, following an 8.9% slump in January, while output from the mining industry tumbled 10.1%. Unemployment rose to 8.5% from 8.0% in the prior reading, according to government statistics.

S&P has revised AES Gener’s outlook to negative from stable and affirmed the Chile-based power provider’s BBB minus ratings. The outlook change reflects increasing leverage to finance the company’s intensive capex plan to incorporate efficient coal fired generation capacity, amid a highly volatile cashflow environment. “We expect the company to reach peak levels of debt to Ebitda of about 3.5x during construction period (compared with 3.2x in 2008) and to start reducing that ratio to levels more in line with the BBB minus rating category once the new projects come on line (2010-2011),” the agency says.

Telefonica Chile plans to sell up to UF6m ($217m) in bonds denominated in pesos and the UF inflation-linked unit April 15, following investor presentations. The unit, also known as Compania Telecomunicaciones de Chile, is proposing to sell 5-year bonds in UF or pesos, at coupons of 3.50% and 6.05%, respectively, and 9.5-year bonds in each, paying 4.25% and 7.00%, respectively. The issuer will determine the exact amount of each during the sale process. Proceeds will be used to refinance a bank loan. BBVA is managing the transaction, which comes from a shelf filed in February. CTC sold UF3m in 7-year notes in October 2005, in its last domestic placement, according to Dealogic.

Regional mobile telephone powerhouse America Movil is planning its first ever Chilean peso denominated bond issuance. A 5-year deal through Banco de Chile is expected as soon as this month, America Movil CFO Carlos Garcia Moreno tells LatinFinance. “It’s going to be the first issue in this format for a foreign issuer directly in the Chilean market,” says the official. “In local currency, rates are lower in Chile than in Mexico,” he adds, saying launch will likely happen this month. America Movil, one of the most advanced LatAm corporate issuers, has a Chilean unit it will finance with proceeds. The company wants to have a more active presence in the CLP market. “Chile is a very sophisticated market, it’s very developed. America Movil is a company that has always liked local markets,” says Garcia. The deal comes from a 30-year $1.2bn program, provisionally rated A3 (stable) by Moody’s. The agency notes America Movil’s leading position in Mexico – with approximately 73% of the wireless market – as well as LatAm, where it has close to 183m subscribers, operating cash flow of $10bn in 2008 and low leverage of 1.1x debt/Ebitda last year. Ratings are constrained by reliance on pre-paid subscribers – over 88% of total subscribers as of December – which Moody’s says are more vulnerable to changes in consumer disposable income than post-paid subscribers. “In addition, the ratings incorporate the challenges in improving margins in the highly competitive Brazilian market, which is expected to become an increasing proportion of the company’s consolidated results,” it adds.

Royal Gold says it is acquiring a 90% interest in the gold stream byproduct of the Andacollo copper mine in Chile from Teck Cominco for a total of $300m. Royal Gold will pay $100m in cash, plus some 4.45m of its own common shares valued at $200m based on a 5-day trailing volume weighted average price of $44.90 per share. Royal Gold is entitled to payment based on 75% of the payable gold produced until production reaches 910,000 ounces of payable gold and payment based on 50% of any payable gold production above that quantity. Teck, which is said to have hired BMO Capital as financial advisor, says it will use the proceeds to pay down debt related to its acquisition of Fording Canadian.

CMR Falabella, the credit service unit of retailer Falabella, has sold in the domestic market CLP90bn ($155m) in bonds backed by credit card receivables. The 2015 notes with a 5.00% coupon priced at 94.46 to yield 6.29%. BCI Securitizadora managed the transaction, rated AAA on a national scale.

Chile’s Compania Cervecerias Unidas has sold UF5m ($180m) in inflation-linked bonds locally. The brewer of Cristal beer priced $108m equivalent in 2014 bonds with a 3.00% coupon at 99.19 to yield 3.18%, and $72m-equivalent in 4.25% of 2030 notes with a 10-year grace period at 99.41 to yield 4.30%. CCU plans to refinance debt with the proceeds, including loans due 2009 and 2010. Celfin managed the sale, rated AA on a national scale.