Category: Chile

Chilean retailer La Polar has issued UF5m ($222m) in local bonds, getting demand for more than UF9m, according to a banker on the deal. The A minus rated issue was done in 3 tranches. A UF1m 6-year piece has a coupon of 3.85% priced at 99.45 to yield 3.98%, a 133bp spread over BCU. A UF1m 10-year piece with a 4.25% coupon priced at 99.66 to yield 4.29%, a 139 spread over BCU. A UF3m 21-year piece with a 4.55% coupon priced at 100.62 to yield 4.49%, a 137bp spread over BCU. Proceeds will be used to refinance debt. BBVA led the sale.

The Chilean government is planning to sell its stakes in local water utilities to raise about $1.6bn, according to the finance ministry. The government would sell its 34.98% stake in Aguas Andinas, 43.44% in Essbio, 29.43% in Esval and 45.46% in Essal. Proceeds will be used to capitalize state-owned companies Codelco, which has a $10bn investment plan, as well as Enap, Metro and EFE. The most likely buyers could be infrastructure companies that are already invested in the utilities, according to a Chilean investment banker not involved in the deal. France’s infrastructure company GDF Suez, for example, owns 57% of Aguas Metropolitanas, which owns 50% of Aguas Andinas, the company says. By capitalizing these companies, the finance ministry says, the government will have resources to invest in the reconstruction of the country, which was devastated by an earthquake in February. The minister of economy, Juan Andres Fontaine, announced the sale could take between 6-9 months. Financial advisors have not yet been hired, according to the ministry.

Banco de Chile will propose a $500m capital increase in January, according to an SEC document. The bank proposes raising the funds by means of the issuance of cash shares that must be subscribed and paid at the price, term and other conditions agreed to at an extraordinary shareholders meeting.

HydroChile on Friday closed a $120m, 14-year club loan through Banco Espirito Santo to help fund construction and operation of a $220m hydro plant. Credit Agricole, BES, BBVA and WestLB participated in the deal. HydroChile was founded in 2007 and develops run-of-river hydroelectric power projects with capacities ranging from 10MW to 50MW. Espirito Santo did not return calls for comment.

As expected, Chile’s central bank tightened its rate by 25bp to 3.25%, citing a favorable evolution in industrial activity, consumer demand and employment rates and a lower than expected inflation rate. Celfin and Morgan Stanley had predicted the rate would reach 3.25% by the end of 2010.

Chile’s central bank is expected to continue hiking its rate today by 25bp to 3.25%. In November, it tightened the rate by 25bp, bringing it to 3.00%. “Though a pause cannot be entirely ruled out, with the prospects for growth quite positive, inflation gradually normalizing and the exchange rate relatively stable, the central bank should have room to continue its tightening cycle in 25bp increments,” says Morgan Stanley. Celfin agrees, and had forecast that the rate would reach 3.25% by the end of 2010.

Chile-based financial institution Caja de Compensacion La Araucana has issued CLP10bn ($21m) in local 5-year bonds via Dutch auction, its second issue of the month. The A rated notes, which priced at par, have a coupon of 7.0% and a spread of 125bp over the BCP-5 benchmark, says a banker on the deal. Two bankers off the deal say the spread came in within expectations of 120bp-140bp. Proceeds of the A rated bonds will be used to refinance debt and to offer credit to clients. Pricing is similar to that seen in the company’s previous issue, where it also sold CLP10bn in 5-year notes. That issue had a coupon of 7.00% and priced at 100.39 to yield 6.90%. Itau Chile managed the sale.