Category: Chile

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.

Banco de Chile has sold UF4m ($159m) in subordinated bonds on the local market, according to Chilean stock market filings. The 23-year note denominated in the inflation-linked UF unit priced at 109.75 with a 4.5% coupon to yield 3.85%. The bank’s Banchile brokerage managed the sale, rated AA on a national scale.

Natalia Corfield has been named LatAm corporate debt analyst at ING, replacing Diego Torres who returned to Chile last month, according to David Spegel, head of EM strategy at ING. She has been working as a desk analyst for 5 months at ING in New York, after moving from Dresdner in London, where she had been since 2004. She was previously at Bear Stearns. Corfield, a Brazilian national, reports to Spegel and will focus on a range of sectors, including banking, airlines, food producers, and metals and mining.

Santander Chile is meeting investors on a “non-deal” roadshow this week in Asia, according to an official familiar with the process. Deutsche and Standard Chartered are managing the tour. Last month, the A+/Aa3 bank sold $500m in 2012 floating-rate bonds priced at Libor+125bp, through Deutsche Bank and Santander.

Corp Group Interhold, the holding company for Chile’s Corpbanca has sold $130m in dollar bonds to international investors, it says. The Reg S 2015 bond priced at 101.520 with an 8.000% coupon to yield 7.525%. Proceeds will be used to finance the holding company’s recent acquisition of local cable television and communications firm VTR Globalcom and for other purposes, it says. LarrainVial managed the sale, rated BBB-/BB.

Fitch says it expects to assign a BBB minus rating to a planned $130m senior notes issue due 2015 from Corp Group Interhold, a Chilean financial services and insurance holding company. Among the group’s main assets are a 49.59% stake in CorpBanca, 66.5% of Compania de Seguros CorpVida and 99.9% of Compania de Seguros CorpSeguros. CorpBanca holds 7.1% of the total loans in Chile’s banking system and has had a stable performance through the current economic cycle, with better comparable credit risk and efficiency ratios than its local peers, says Fitch. Corpvida has a local market share of 7.2% in managed assets and 7.6% in technical reserves, while CorpSeguros claims a local market share of 10.8% in technical reserves, it adds.

Chile plans to raise $500m via a debut peso-denominated global bond issue, as well as $1bn in 10-year dollar bonds, its finance minister says. Both deals are expected in the next few months and a CLP issue would follow this month’s blowout issue from Colombia, which marked the first local currency LatAm deal on the global market since 2007. Bankers say Chile could get similar pricing to Colombia, which raised $800 million equivalent in a 2021 at 80bp-85bp through the local TES curve, or 3.5% in dollars. After such an attractive benchmark, other issuers like multilateral CAF are also considering the format. The 10-year peso note will aid Chile’s agenda to “internationalize” the peso, says finance minister Felipe Larrain. Chile’s first global bond issue since 2004 coincides with a medium-term aim of becoming a regular issuer and establishing a liquid curve. “There is not a certainty that we will come every year, but we are planning to change the strategy,” says Larrain. “We understand there is appetite for Chilean bonds and we are confident we can get good terms,” he adds. He expects an SEC filing soon, and says issuance should come “in the next few months.” The government is in the process of selecting banks to underwrite. Analysts estimate a Chilean 10-year dollar issue would price 10bp-15bp through Brazil. Bankers pitching the sovereign expect the new bonds in late May to early June at the soonest, given that it has not yet registered its SEC shelf. With Chile’s $1.5bn in outstanding bonds due in 2012-2013 and not very liquid, the government is keen to establish a curve. The ministry is still sorting out the amount it will draw from the sovereign wealth fund and from domestic bond issuance that, along with the $1.5bn from international bond sales, would contribute to $8.4bn reconstruction costs. Chile expects $300m from donations made under a recently approved broadening of tax regulations, $730m from budgetary adjustments, and some $3.2bn from tax increases. Chile

Chile president Sebastian Pinera has pledged to invest $8.4bn over the next 4 years in reconstruction efforts following the strong February 27 earthquake, according to government information. Funds for the plan will come from the country’s sovereign wealth fund, the copper reserves, sales of non-core state assets, temporary increases in corporate tax, of 3 percentage points in 2011, and 1.5 percentage points in 2012, and changes in the copper royalty that large-scale miners currently pay. The president also announced a permanent increase in tobacco taxes, and a temporary increase in the real estate taxes currently paid on the highest-valued 5% of residential properties.