Category: Chile

Chile’s National Mining Society, Sonami, predicts that this year the price of copper will fluctuate between $1.40-$1.80 a pound and exports will drop by almost 50% to $21.5bn. It also says that by the end of 2008 some 12,000 jobs had been lost in the country’s mining industry. Chile’s copper commission, Cochilco, believes the price of the red metal will average $1.60 per pound this year, falling to $1.50 in 2010.

Chilean welding material and industrial and medical gas producer Indura has placed $120m in bonds denominated in the UF inflation-linked unit in the local market. Indura priced UF3m ($102.5m) in 2030 bonds at 101.91 with a 6.30% coupon to yield 6.10%, and UF0.5m ($17.1m) in 2014 bonds at 101.40 with a 6.40% coupon to yield 6.06%. Proceeds will refinance debt. Santander and BBVA managed the sale.

Chilean billionaire Sebastian Pinera plans to sell his controlling stake in Axxion, a holdco for a 19% stake in Lan Airlines and other assets, according to a regulatory filing. Based on the Tuesday share price, the holding is worth about $540m. Pinera’s Santa Cecilia Inversiones plans to sell his Axxion stake “through periodic sales for an indefinite period starting January 20,” according to the filing. Axxion holds 64.48m shares in the airline, which closed Tuesday at CLP5280 ($8.36). Pinera has said he plans to divest most of his holdings – which also includes the Chilevision TV channel and a stake in soccer team Colo-Colo – before mounting another presidential bid. He lost to Michelle Bachelet in 2005.

Chilean state-owned copper producer Coldelco braved sour markets and US presidential inauguration distraction to become the first LatAm corporate out of the gates this year, bagging its first cross-border bond since 2006. The quasi-sovereign priced $600m in 2019 notes at 98.229 with a 7.500% coupon to yield 7.759%, or UST+537.5bp. This was the tight end of official 537.5bp-550.0bp guidance which followed early whispers of low 500s. Bankers and investors away from the deal say the yield indicates a new issue premium of 35-45bp, though that is difficult to gauge given that the closest outstanding bond is a relatively illiquid 4.75% of 2014. The concession is in line with recent sovereign offers. Bankers away from the sale note difficulties related to uncertainty about price levels following the recent Brazil 2019, as well as overly aggressive levels from the issuer. “They probably started off too tight,” says one, referring to early whispers. “It’s not a blowout, but it’s positive for the market,” says a dedicated EM investor, adding that the window for other issuers depends on how the bond trades in the next few days. The transaction grew from a targeted $500m, says a banker managing the sale, which garnered demand of $1.25bn. The A1/A notes were placed with 80-90 accounts, with about 75% from the US, 15% in Europe and 10% LatAm, Asia and other regions, says a banker on the deal. HSBC and JPMorgan were the leads. The sale – Coldelco’s first since a $500m 6.15% 2036 in 2006 – had been anticipated since JPMorgan and HSBC beat out a gaggle of pitches for the mandate in August. Codelco plans to spend $2bn on expansion this year, about half of which is set to come from the government, meaning it could seek some $400m extra in 2009 funds.

Chilean state-owned oil and gas company Empresa Nacional del Petroleo (Enap) has issued about $333m in local bonds denominated in the UF inflation-linked unit. The 2019 notes priced at 101.72 with a 4.35% coupon to yield 4.33%. Proceeds from the sale, rated AAA on a national scale, will refinance short-term debt. Enap faces $800m in short-term maturing this year as a result of the strong surge in oil prices in 2008. Celfin and Santander were the leads.

Chilean mining services provider Sigdo Koppers and Peruvian conglomerate Grupo Brescia are planning to invest $650m in developing an ammonia and ammonium nitrate project in Peru’s Ica department. A Koopers spokeswoman says financing for the project has not been determined. The companies have jointly established Holding Nitratos in Peru, with Brescia holding a 51% stake and Koppers, through its subsidiary Enaex, with 49%. Holding Nitratos will be the owner of the petrochemical project and its subsidiary Nitratos del Peru will oversee its construction, Koopers says in a filing with the Chilean securities regulator. The project, which is still awaiting approval, is expected to be completed by 2011.

Chilean fertilizer and chemical producer SQM has issued $173m equivalent in 5 and 21-year bonds. SQM priced CLP21bn ($34m) in 2014 7.0% bullet bonds at 98.01 to yield 7.5%. It also sold UF4m ($139m) in 21-year 4.90% bonds with a 10-year grace period denominated in the UF inflation-linked unit, priced at 98.41 to yield 5.05%. The proceeds from the AA minus rated sale will be used to finance a $100m syndicated loan due in early 2010. Banchile, IM Trust and LarrainVial managed the transaction. SQM is an integrated producer and distributor of specialty plant nutrients, iodine and lithium.

Chilean gas utility Enap plans to issue about $35m in local 10-year bonds. The notes will be denominated in the UF inflation-linked unit. Proceeds will be used to refinance debt. The issuer does say when it will sell the debt, or on what terms. Recent reports in the Chilean media had indicated plans for a $300m-$500m domestic issue, following rumors that Enap might even consider a 10-year in the international markets. The borrower faces some $800m in debt maturities this year and expects 2008 losses to total more than $550m.

Chile’s central bank has chopped the monetary policy rate by 100bp to 7.25%. The consensus was that it would cut the rate between 25bp and 75bp. “This decision is based on the perspective of a significant drop in inflation in the medium term, caused by the drastic changes in the macroeconomic scenario,” says the central bank’s statement on the policy rate cut. It adds that most probably the rate cuts will continue, based on inflation figures. Chile’s inflation for 2008 was 7.1%, following a decline to 1.2% in December alone. The central bank’s objective is to bring inflation down to 3%.

Chile plans to issue more than $1bn-equivalent in bonds on the local market this year, its finance ministry said Thursday. Finance Minister Andres Velasco indicated Tuesday that it would look to the domestic and international bond markets to fund a $4bn economic stimulus package. The plan is to issue about $382m in 10-year bonds, $341m in 20-year bonds and $341m in 30-year bonds. The 10-year bonds will be issued in pesos, while the 20 and 30-year bonds will be issued in the UF inflation-linked unit. Monthly auctions are set to begin in March.