Category: Chile

Chile aims to become a frequent bond issuer, following on from a successful $1.5bn 2-tranche 2020 deal in July, finance minister Felipe Larrain tells LatinFinance. He adds that this will partly be to fund the $8.4bn it will need to invest over the next 4 years to continue to repair damage from the earthquake. The total funds needed for reconstruction, from both private and public funds, are estimated at $30bn, he adds. Larrain adds that the bond issuance also set a benchmark for private Chilean companies to issue bonds. “We were able to reduce the cost of borrowing for the state, which will also benefit Chilean companies so that they can issue in pesos,” he adds. Larrain also says Chile could look to build out its curve in pesos, and may do a 5-year bond issue next, though he does not say when. He adds that for the moment the finance ministry is not looking at doing bond issues in other currencies. “We have diversified our assets in a range of currencies through our sovereign fund, and while there is a possibility we could diversify our liabilities we have minimum size constraints, so for the moment we will focus on Chilean pesos and dollars,” says Larrain. The finance minister is also confident that Chile will continue to be able to raise funds in international markets at very competitive levels, and will need very little support from the IMF. He adds that he expects Chile to have a long term sustainable growth rate of 6%. Projects the government is working on, aside from mining, which Larrain says are worth $50bn over the next 10 years, include ports construction, which the government is auctioning concessions for, and renewable and traditional energy generation projects, as it needs to increase capacity by 80%.

Chilean bank Corpbanca issued UF2.2m ($97m) in local bonds in a single tranche via a Dutch auction. The AA-/AA rated notes priced at 92.71 with a coupon of 3.00% to yield 3.95%, an 88bp spread over BCU-10. Corpbanca’s own brokerage handled the sale.

Shopping the DCM banks for bookrunners since August, Codelco has revealed its board approved in July the issuance of up to $1.8bn in debt at maturities up to 30 years. The state-owned copper producer is heard considering seriously a dollar bond, though the approval also contemplates domestic bonds and bank loans. Codelco says it did not reveal the authorization until Friday due to “pending negotiations with third parties.” Conditions for a dollar bond might prove too good to resist with UST still very low, the Chilean sovereign setting a $1bn 2020 benchmark in July to yield 3.890%, and Chilean banks and corporates being generally well-received this year. The A1/A miner is a popular though very infrequent issuer, having last sold $600m in 7.5% 2019s in January 2009 through HSBC and JPMorgan, to a $1.25bn order book. Citi, HSBC and JPMorgan, which led the Chile sovereign deal, are favored to run the copper producer’s bond.

Chile’s BancoEstado has raised $500m in its debut dollar bond sale, with investors putting up about $4bn in orders, according to a banker on the deal. The state-owned institution priced the 2020 at 99.240 with a 4.125% coupon to yield 4.219%, or UST plus 170bp, the tight end of 170bp-175bp guidance. This comes about 75bp back of the UST plus 95bp level of the Chilean sovereign, an investor says. Deutsche Bank and JPMorgan managed the Aa3/A+ deal.