Category: Chile

Chilean telecom company Entel is out with a $600m facility to take out a previous line for the same amount which was led by JPMorgan. The old facility is tied to a leverage grid, with a current margin of 42.5bp over Libor, according to a banker away from the deal. Entel was in discussion with several banks, but Citi and ABN AMRO are heard to have been awarded lead roles on the new facility, bank market sources say.

Brazlian bank Itaú is planning to raise up to $60m in the Chilean market via the issuance of a 10-year bond, to help fund the expansion of its local business. Itaú bought the Chilean assets of BankBoston together with those of Uruguay last August in an operation worth BRL2.3 billion

In line with market expectations, Chile’s Central Bank held its benchmark interest rate at 5.0% for a six consecutive month on Thursday. A statement released by the Bank following the monthly meeting of its Monetary Policy Committee signaled that further tightening is up ahead.

Chile’s Central Bank will decide to hold its benchmark interest rate at 5.0% for a six consecutive month on Thursday, according to a survey of analysts carried out by Dow Jones. A note from Goldman Sachs commented that, “the communiqué that will follow the [Monetary Policy Committee] meeting should be more hawkish than the one issued after the May meeting in order to prepare the market for higher rates ahead as the May data on activity and inflation surprised on the upside and labor costs continue to go up (tightening labor market).” A survey carried out by the Central Bank last week also saw analysts predict the rate would remain unchanged this month.

Chilean furniture and interior design firm Masisa priced the first bond to test local pension fund appetite since the Chilean government allowed them to invest more abroad. Juan Ignacio Montes at IM Trust, which led the deal, says Masisa’s bond proved pension funds remain supportive of local issues. The $88m inflation-linked three-tranche bond priced late Thursday and racked up $209.4m in demand. The $17.6m five-year F and G series bonds priced at 3.73% and 3.72%, roughly 80bp over Chilean central bank notes, and the $52.8m 21-year H notes priced at 4.64%, or 114bp over. Pension funds, insurance companies, mutual funds, banks, stockbrokers and asset managers were the buyers.

The $440m non-recourse debt financing for AES Gener’s new coal-fired power plant in Ventanas, Chile has closed twice oversubscribed with a total of 20 banks in the syndicate. The financing consists of a three-year construction loan that converts into a 12-year bullet. AES Gener, the second largest power generator in Chile, is sponsoring the 241.8-megawatt project, named Empresa Eléctrica Ventanas or Nueva Ventanas. AES Gener has fully contracted the project’s electricity and capacity under a 15-year toll. Fortis and Calyon were joint bookrunners.

Chile’s long-awaited second stage of its capital markets reform – MKII – was signed into law by finance minister Andrés Velasco, Thursday, who said it will be implemented from next week. The reform focuses on three main areas: financing and promoting small and mid-sized companies; capital market security; and developing the financial markets. The first part of the reforms were brought in five years ago.

Chile’s economy expanded by 5.8% in the first quarter of the year, picking up pace from the 4.3% expansion seen in the final quarter of last year. Growth was driven by exports, investments and industrial output, according to Central Bank figures. The upbeat result may prompt the Central Bank to raise the benchmark overnight lending rate in the near future, say analysts.

Chilean stocks across the board fell on Tuesday on earlier news that the government was speeding up plans to raise the investment limits abroad by pension fund managers from 30% to 45% of assets. The IPSA index of 40 leading shares ended the day down 4.35% at 3,115.40.

Chilean electricity provider Colbún sold around $320m worth of local inflation-adjusted bonds on Thursday, issuing the paper in two tranches with maturities of 6 and 21 years. The 6-year notes sold to yield 3.56% and the 20-year paper to yield 4.07%, according to a filing by Colbún with the local stock exchange. Santander Investment led the issues. Last week the generator had announced it would place up to $425m via the sale of 8- and 20-year bonds. Colbún has succeeded in improving its financial position in recent years – boosting liquidity and extending its debt profile. The company has been investing in expanding generation capacity and expects three new facilities to come on line in 2007, generating an extra 145MW or 700 GWh a year.