Category: Chile

Chile’s central bank raised the benchmark interest rate by 25bp to 6% Thursday, surprising most analysts who thought the rate would be kept on hold. Credit Suisse was among the few shops predicting a hike. “By tightening today, against market expectations, the bank would send a strong signal of discomfort about current inflation levels (headline and core) and would contribute to the reduction of second-round effects. In our opinion, inflation risks in Chile have been underestimated, while risks to the growth outlook have been exaggerated,” according to a Thursday report. Separately, Moody’s’ Mauro Leos told Bloomberg Thursday the agency considering raising Chile’s outlook to positive from stable next year because of rising copper exports.

Chile’s Banco Estado, which several weeks ago put out an RFP for a 5-year loan of up to $350m, has postponed launch until early next year due to turbulent market conditions, according to a banker close to the process. The state-owned bank, which is understood to have already tapped an institution to lead the syndication, was apparently greeted with some resistance from prospective lenders who found Estado’s desired pricing of Libor plus 20bp-25bp somewhat tight given current market conditions. Short term borrowing costs for European banks especially have risen significantly in the past weeks, making lending at razor thin margins a tough proposition. Chilean loans are of particular interest at the moment since the country has for years commanded the narrowest margins in the region. In September, Codelco, another state-owned Chilean entity, took out a $400m 7-year step up loan that pays 12.5bp over Libor in year one and 15bp over Libor in the ensuing three years.

Chilean department store Ripley is preparing to auction about 136m new shares Monday, which could raise an estimated $170m. Ripley also plans to offer current shareholders an additional 24m shares through January 15, which is expected to net the company $30m. The $200m will be used to finance Ripley’s $588m 2008 investment plan in Chile and Peru. In the coming three years, Ripley plans to issue an additional 240m new shares.

Chilean utility holding company Enersis has filed to issue about $487m in local UF-denominated bonds. The company did not give a timeframe for the bond sale, with which it will finance an investment plan. Santander will manage the offering. Parent Endesa plans to invest $1.2bn in LatAm next year.

Chilean utility holding company Enersis has filed to issue about $487m in local UF-denominated bonds. The company did not give a timeframe for the bond sale, with which it will finance an investment plan. Santander will manage the offering. Parent Endesa plans to invest $1.2bn in LatAm next year.

Fresenius Kabi, a unit of Germany’s Fresenius, is acquiring Laboratorio Sanderson, the Chilean IV drugs and infusions firm. Privately owned Sanderson employs around 375 people in Chile and Peru and forecasts 2007 sales of EUR19m. The takeover should close in January.

Chilean generator AES Gener has issued local bonds worth about $220m. It priced $47m in 2015 UF-indexed bonds, at 3.85%, and $173m in 2028 UF-indexed bonds at 4.3%. Proceeds will be used to finance local expansion and refinance debt. IM Trust was the bookrunner.

Chile has named Jose De Gregorio as the country’s central bank president. He currently serves as the central bank’s vice president and replaces Vittorio Corbo, whose five-year term is ending. “Jose De Gregorio is a renowned economist with international and government experience seen as orthodox and fully committed to the current inflation targeting regime within a free floating FX regime,” says Goldman Sachs. “We do not expect to see any noticeable change in the way the central bank conducts monetary policy,” it adds, calling Chile’s central bank “one of the most credible in the region and one of the most transparent in the conduction of monetary policy.” Sebastian Claro is set to join the central bank board, which together with De Gregorio, Goldman sees as a market neutral to positive development. The immediate challenge is inflation.

Chile has named Jose De Gregorio as the country’s central bank president. He currently serves as the central bank’s vice president and replaces Vittorio Corbo, whose five-year term is ending. “Jose De Gregorio is a renowned economist with international and government experience seen as orthodox and fully committed to the current inflation targeting regime within a free floating FX regime,” says Goldman Sachs. “We do not expect to see any noticeable change in the way the central bank conducts monetary policy,” it adds, calling Chile’s central bank “one of the most credible in the region and one of the most transparent in the conduction of monetary policy.” Sebastian Claro is set to join the central bank board, which together with De Gregorio, Goldman sees as a market neutral to positive development. The immediate challenge is inflation.

Empresa Electrica Guacolda has wrapped up syndication of a 15-year $260m project deal for the construction of a 152MW power plant near Maitencillio, Chile, the fourth in a series. Pricing begins at 85bp over Libor, stepping up to 140bp. Calyon is the lead, with agent banks Scotia and CorpBanca. ABN Amro, Itau, Banco Estado and Caja Madrid also participated. Guacolda is jointly owned by AES Gener (50%), local industrial conglomerate Empresas Copec (25%) and Ultraterra (25%). Calyon is also currently syndicating a $240m 19-year loan to refinance debt at the 230MW Termoelectrica de Penoles plant in Tamuin, Mexico, which was purchased by AES earlier this year.