Category: Chile

Suez Energy International has chosen Calyon to lead project financing for the 150MW Central Termoelectrica Andino coal-fired power plant in Northern Chile, according to a banker following the deal. The facility has a 21-year contract with copper producer Codelco to supply power to two of its mines.

Banco Santander Chile has reportedly priced a $188m 2017 local bond issue, denominated in the UF, at par to yield 3.86%. Use of proceeds was not disclosed.

Fitch has upgraded Compania Cervecerias Unidas (CCU), the largest brewer in Chile, to A from A minus. The outlook is stable and Fitch lauds “the company’s adherence to a very strong capital structure for a prolonged period of time, as well as its strong performance in the Chilean beer market despite increased competition from Companhia de Bebidas das Americas (AmBev).” The ratings factor in the product and geographic diversification of the company’s cash flow from operations. CCU had a market share of 86% in the Chilean beer industry during 2006, which increased to 87% during the first half of 2007, says Fitch. As of June 30, CCU had $270m in debt and $78m in cash and marketable securities. It generated $253m of operating Ebitda in the 12 months to June 30, up from $230m in 2006.

Moody’s has upgraded Chile’s Entel to Baa1 from Baa2, based on improvements in the company’s margins and credit protection metrics as keeps focused on the profitable wireless business and maintains disciplined expense management. The outlook on the rating was changed to stable from positive. “Continuing to support Entel’s ratings are its integrated business model and market position as the number one wireless service provider in Chile, where it has approximately 44% service revenues market share,” says Moody’s. However, a constraint is the management policy of paying out high amounts of cash to shareholders, thus weakening free cash flow generation and respective credit protection metrics.

Chile’s Ripley plans to seek shareholder approval October 10 for an issue of 400,000 shares, it said in a regulatory filing. The company says it expects the offer to yield CLP250bn. It did not specify use of the proceeds, but is expected to be seeking financing for new investments in the next two years. Ripley, with operations in Chile and Peru, is controlled by Grupo Calderon.

Chile’s AES Gener has called an October 5 shareholder meeting to approve a capital increase of up to $300m equivalent in pesos.

As expected, Chile moved its benchmark rate to 5.75% Friday, the third monthly hike in as many months. The bank says the tightening and prior rate rises are necessary to keep inflation in the 3% area over the coming two years. Goldman Sachs says the Central Bank’s language suggests that future monetary policy will not be in reaction to existing inflationary pressures. Based on other hawkish remarks in the Central Bank’s statement Friday, the shop predicts at least one more increase by year-end.

Engineering and project management company AMEC, headquartered in the UK is buying Chilean engineering firm Cade-Idepe. The two had been partnering in the region for more than a decade, and AMEC claims it will form Chile’s largest engineering firm, specializing in energy, power and infrastructure projects. The value of the transaction was not disclosed.

New Jersey’s Public Service Enterprise Group is exploring the sale of its half stake in Chilean Chilquinta Energia and its 38% stake in Peruvian Luz del Sur. San Diego-based Sempra Energy is a partner in both businesses. PSEG put Peru’s Electroandes on the market earlier this year, and has sold international power generation assets outside the US to focus on domestic operations.

US utility PPL agreed to sell its 95% interest in a Chilean electricity delivery business Empresas Emel to Compania General de Electricidad for $660m, the company said in a statement. PPL announced its intention exit Latin America in March, and has since completed sales of delivery companies in El Salvador and Bolivia. JPMorgan advised PPL on the sale.