Category: Chile

As expected, Chile has officially put out on RFP for new dollar bonds, according to bankers, part of a plan to return to the markets that was announced in April. The sovereign is considering raising $500m through a debut peso-denominated global issue, as well as $1bn in 10-year dollar bonds, it said earlier this year. The sovereign has yet to file an SEC shelf. Though it was expected to be able to come to the market as soon as June, the current downturn in the global markets could delay the new transaction. Chile is looking to become a more frequent issuer and re-establish a curve, as it seeks to raise funding to support post-earthquake rebuilding.

Lloyd’s, the UK-based specialist insurance market, says it estimates net claims before tax from the earthquake in Chile to be in the order of $1.4bn. It says the amount is consistent with the upper range of industry insured loss estimates and draws on market share analysis, modeling, and a review of contracts in force as well as early estimates from each insurance underwriting syndicate. Lloyd’s adds that actual ultimate net claims may vary from the preliminary estimate. “The claims relating to the Chilean earthquake will evolve for some time,” says Lloyd’s CEO Richard Ward. The final amount will depend on several factors, including terms on individual policies.

Chile’s Telefonica del Sur, also known as Telsur, is planning to issue up to UF2m ($79m) in 2 separate issues each. A roadshow is expected to take place in the last week of May, says a banker on the deal. IM Trust will handle the sale. Meanwhile, Cementos Bio Bio is planning to issue CLP20bn ($37m) through BBVA, but terms and an issue date have not been determined yet, according to a banker on the trade.

Private equity operator Linzor Capital is buying Chilean television channel Chilevision for about $130m, confirms a Chile-based investment banker with knowledge of the deal. He adds that there were no financial advisors involved in the deal. Chilevision was controlled by Chile president Sebastian Pinera. Linzor officials do not return calls for comment. The PE firm operates in Argentina and Chile.

The sale of a 51% stake Chilean drugstore chain Farmacias Ahumada belonging to founder Jose Codner is nearing its end and a buyer should be announced at any moment, says a person close to the negotiations. The target company does not return calls for comment, but local press reports indicate that potential buyers are US-based Walgreens, Walmart, Mexico’s Casa Saba, Chile’s Falabella – which already holds a 20% stake – and Argentina-based private equity firm Pegasus, which controls the Farmacity chain. Goldman Sachs and local shop Altis are advising the seller. Philippi Yrarrazaval Pulido y Brunner is the legal advisor, according to company information. Farmacias Ahumada, which has more than 1,200 stores in Chile, Mexico and Peru, has sales of about $1.7bn. The company has a market cap of about $300m.

A $120m 14-year financing package for Hydro Chile is in due diligence and expected to close by July. Banco Espiritu Santo, Calyon and WestLB are leading the deal and may bring another bank in. A banker not on the transaction but familiar with the sector estimates a price of just over 400bp above Libor. The funding is for 2 run of river hydro power projects, El Paso and San Andres.

Chile’s central bank has opted to leave its monetary policy rate unchanged at 0.50%, saying that the immediate effects of the recent earthquake turned out to be worse than expected, but that consumer demand is increasing faster while unemployment is decreasing. Morgan Stanley had forecast that with inflation under wraps, the central bank may choose to wait until June for further evidence of how fast the economy is rebounding from disruptions caused by the earthquake. Barclays, on the other hand, believed a 25bp hike was possible and that Chile could tighten to 6.25% by December 2012.

Chilean president Sebastian Pinera has appointed former banker Gerardo Jofre as chairman of Codelco, the state-owned copper producer says. In addition to being on Codelco’s board, Jofre is also a director at Deutsche Bank and Lan Airlines, and was a former executive at Santander. He succeeds Nicolas Majluf. Pinera has also elected Fernando Porcile, Juan Ossa and Andres Tagle to the board. Former BHP and Vale executive Diego Hernandez had already been named as new CEO, and will begin May 19.

While some analysts Chile to leave rates at 0.5% today, others believe tightening may begin. Barclays believes a 25bp hike could come today, with the policy rate reaching 6.25% by December 2012. On the other hand, Morgan Stanley forecasts that “with inflation so far well behaved, we suspect the central bank may choose to wait until June for further evidence of how fast the economy is rebounding from the dislocations caused by the earthquake.” It does say, however, that there is a risk of the tightening cycle beginning immediately.

Chilean financial institution Corpbanca has issued UF2m ($80m) in 10-year local bonds. The notes priced at 105.12 with a coupon of 4.00% to yield 3.42%. Corpbanca, previously known as Banco de Concepcion, claims to have a 7% share of Chile’s loan market and operates 107 branches. Corpbanca’s brokerage unit managed the sale.