Category: Chile

Chilean state-owned bank BancoEstado has priced $76m in 2028 bonds denominated in the UF inflation-linked unit, at a yield of 4.45%. Proceeds will go toward strengthening the bank’s capital base. BancoEstado managed the sale, rated AAA on a national scale.

Moody’s has upgraded Chilean gas and power utility Edelnor to Ba3 from B2, with a stable outlook. “The rating action primarily reflects an improved business environment for Edelnor due to the drastic reduction of low-cost natural gas imports to Chile from Argentina, thus allowing Edelnor to increase its contracted dispatch capacity,” the agency says, adding that it expects dispatch rates to remain high in the near term. Despite exposure to volatility in the mining and commodity sectors, Edelnor’s leverage has reduced, and cash flow generation and business risk profile have improved.

Chilean water distribution company Aguas Nuevas is exploring the sale of 100% of its assets to Australia’s Challenger Management Services, the Chilean company says in a filing with the local regulator. The sale will include subsidiaries Aguas del Altiplano, Aguas Araucania and Aguas Magallanes, the company says. In 2007 Aguas Nuevas reported CLP16.23bn in profit.

Chilean food producer Watt’s has priced $78.9m equivalent in 2015 bonds denominated in the UF inflation-linked unit, with a 3.90% coupon at 98.56 to yield 4.25%. The maker of oil, fruit and dairy products plans to refinance debt with proceeds. Larrain Vial managed the sale.

Generator Endesa Chile is considering dollar bonds, local notes and syndicated loans to refinance an 8.5% $400m bond due next year, CFO Manuel Irarrazaval tells LatinFinance. “Bank loans are difficult, as rates are higher due to the credit crisis in the US,” says the official. Irarrazaval expects to pay more than the Libor plus 75bp it got when refinancing a similar $400m bond in June with a 6-year loan from BBVA, Caja Madrid, Bank of Tokyo, Santander and Banesto. While Chilean rates are also higher, he still sees a very strong local market. Endesa has capex plans of more than $700m per year for the next 5 years as it looks to add 2GW of generation in Chile, Peru, Colombia and Brazil.

More hawkishness is expected from the Chilean central bank following last week’s 50bp rate hike to 8.25%, analysts say. “A policy rate of 9.00%-9.25% by year-end 2008, is a distinct possibility, which should exert an appreciation pull on the CLP,” says Goldman Sachs. The central bank is acting decisively on inflation amid global EM prices rises and firm local consumer demand, and has hiked rates four times in a row. The inflation target is 3.0%. Credit Suisse is less hawkish. “Central bank will tighten the policy rate by 50bp in the remainder of the year (two hikes of 25bp), putting the overnight rate at 8.75% at year-end,” says the shop, adding that the two hikes will come in the final quarter of the year. Lehman meanwhile expects up to 125bp in further tightening.

Empresea de Transporte de Pasajeros Metro, which operates Santiago’s subway, has placed $155m equivalent in UF-denominated bonds. The transaction rated AA minus/AA on a national scale is the Metro’s first bond without a government guarantee. It priced $40m equivalent in 2020 bonds with a 4.30% coupon to yield 4.45% and $115m-equivalent in 2029 notes with a 4.70% coupon to yield 4.78%. Metro plans to repay old debt with the proceeds. Celfin Capital managed the sale.

Chilean shopping mall developer Parque Arauco is eyeing local markets debt financing and looking for equity investment to fund projects in new markets. “We plan to issue debt in Peru and Colombia,” Juan Pablo Spoerer, CFO, tells LatinFinance. He adds that Arauco seeks to place a total $271m in the local markets of the two countries. And while public stock issuance is not under consideration, the developer aims to get about $180m in equity investment from private investors for Peruvian and Colombian projects. Spoerer says Arauco will begin placing bonds as individual projects – mostly construction of new malls – begin, with the first coming before the end of the year. It has 11 projects set for 2008-2010 in Chile, Peru, and Colombia, totalling north of $1bn, as it aims to double total gross leasable area to 1.2m square meters. New projects include the $120m San Isidro mall in Peru, and the $80m Pereira and $157m Barranquilla shopping centers in Colombia.

Former Chilean finance minister Nicolas Eyzaguirre has joined the IMF as director of the western hemisphere department – the Fund’s man in LatAm – effective January 1. He replaces Anoop Singh, who was appointed director of the Fund’s Asia Pacific department as part of an ongoing refocusing effort. “[Eyzaguirre] is credited for sound macroeconomic policies and economic reforms that have contributed to the strong economic performance of Chile since 2000,” says IMF MD Dominique Strauss-Kahn. Eyzaguirre is professor of economics at the University of Chile, where he was finance minister in 2000-2006. The former central bank director of economic studies and IMF executive director for Argentina, Bolivia, Chile, Paraguay, and Uruguay in 1998-2000, was the LatinFinance Man of the Year in 2003.