Category: Chile

Chilean casino operator San Francisco Investment has clinched a $120m 8-year loan from Isle of Man-based Standard Finance for a new resort project to be located in the city of Mostazal, in Chile’s VI region, the company says on a filing with the Chilean regulator. The facility has a grace period of 12 months, San Francisco says, and Standard Bank of South Africa was sole arranger.

Vancouver based miner Coro has entered in a financing agreement with resource merchant bank Dundee Global to fund the purchase of the Cerro Negro copper mine in Chile. Under the agreement, Dundee Global will undertake two private placements totaling an aggregate of $15m, equivalent to 25.04% of the outstanding shares of Coro, and provide a $25m loan at a 12% interest rate, Coro says. The facility is non-revolving with an initial term of 12 months from the closing date, which is targeted for September, Coro says. In operation since 1944, the Cerro Negro mine is located 37km south east of Cabildo in the province of Petorca, and produces 6,000 tpy copper cathode. The Canadian company also operates the Flores mine in Chile and San Jorge in Argentina. Dundee Global is a subsidiary of Cayman Island’s based The Dundee Bank.

Chile’s central bank bumped up its benchmark interest rate late Thursday by 50bp and maintained its tightening bias. The bank’s board said the decision to raise the TPM rate is based on a deteriorating inflation scenario in the country. The rate now stands at 7.75%.

Banco de Chile has received a $100m 3-year loan from the China Development Bank to finance foreign investment transactions between clients of the bank and China, a bank official says. Pricing was not disclosed. Earlier this month, Banco de Chile issued $162m equivalent in bonds denominated in the UF inflation-indexed. The AAA rated 2013 notes priced at 94.11 with a 2.50% coupon to yield 3.75%.

The Chilean central bank is expected to raise its benchmark rate 50bp at its Thursday meeting, according to analysts, from 7.25%. “The market is calling for additional monetary action in Chile, since inflation stays at its highest point in at least the past decade,” the agency says. “There is a high probability that the central bank will hike again, not because it wants to follow the market’s desires, but because it still has a little room to move monetary conditions to a more neutral territory,” Moody’s adds. Goldman also predicts a 50bp hike, based on the dynamics of inflation in Chile. “Inflation is still a major issue and the central bank has shown a renewed commitment to control inflation,” says Alberto Ramos, analyst at Goldman. Further tightening is expected over the rest of the year, according to Lehman. “We consider that given the deterioration of the inflation scenario, much more stringent monetary conditions will be needed to make inflation converge to the target in the two-year horizon,” the shop says. “In our view, the current tightening cycle will bring the TPM rate to 8.50% by year end,” Lehman adds.

Chilean power generator Compania General de Electricidad has sold $298m equivalent in bonds denominated in the UF inflation-linked unit. CGE priced $219m equivalent in 2029s at 99.01 with a 4.65% coupon to yield 4.73% and $80m equivalent in 2013s at 99.55 with a 3.75% coupon to yield 3.85%. Proceeds will be used to fund investment. BBVA Chile managed the sale. Activity in the local bond market has picked up this month, with transactions including $201m from Molymet, $118m from BancoEstado and Colbun pricing $280m in a combined UF/dollar sale.

Chilean state-owned bank BancoEstado has priced $118.9m equivalent in 2018 bonds denominated in the UF inflation-indexed currency unit at 94.63 with a 3.5% coupon to yield 4.18%. The UF3m sale drew UF8.1m in demand, the bank says. Proceeds from the transaction rated AAA on a national scale will be used to finance the bank’s growth plans. BancoEstado managed the sale.

Chilean electricity generator AES Gener has sold 25.01% of Dominican electrical generator Empresa Generadora de Electricidad Itabo and 50.01% of New Caribbean Investment for $68m. The stakes were acquired by other subsidiaries of its parent company AES Corporation. Proceeds will be used to finance AES Gener’s investment plans in Chile.

Petrobras may look to develop or acquire refinery capabilities in Chile as it pursues an integrated supply chain in the country, say Itau analysts. The company’s purchase last week of distribution assets in Chile adds a crucial part to its yet to be integrated business. Petrobras currently exports LPG, LNG, petrochemicals and lubricants to Chile, notes the shop. “The one supply chain node still missing, the refinery, will likely be the next step for Petrobras as it aims to establish an integrated business in the country,” says the shop. State-owned ENAP is currently Chile’s only refiner, note the analysts.

Petrobras has agreed to pay $400m for Exxon Mobil’s stakes in Esso Chile Petrolera. The deal includes approximately 230 service stations, of which 109 will have convenience stores Petrobras will own and operate; fuel distribution points at 11 airports; 6 fuel distribution terminals; and a 22% stake in Sociedad Nacional de Oleoductos as well as a 33% stake in Sociedad de Inversiones de Aviacion. The transaction is consistent with the state-owned entity’s goal to build up its share of the LatAm downstream business. In this segment, Petrobras already operates in Argentina, Colombia, Paraguay and Uruguay, with a network of nearly 1,000 service stations, says the company. Itau analysts say at a multiple of 7.3x enterprise value over 2008 Ebitda, the acquisition is not cheap, and comes higher than Petrobras’ roughly 5.5x trading multiple today. Itau notes the link in the company’s supply chain it doesn’t control in Chile is in the refining process.