Category: Chile

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.

Chile shipper Cia. Sud Americana de Vapores sold an 18% stake in the company to a group of German shipbuilders via an auction on the local exchange for $360m, says Celfin Capital, which managed the sale. The shop does not disclose the names of the buyers. The auction included 318.4m shares which were sold at CLP583.83 per share. Vapores’ shares closed at CLP425.0 on April 16.

Chile’s central bank kept the monetary policy rate intact. Morgan Stanley is pushing forward its expectations for tightening with policy rates ending the year at 2.75% from 2.00% previously, reaching 5.00% by December 2011. Chile’s Celfin Capital says that tightening may begin in the second half of the year, ending 2010 at 2.5%.

Scotiabank’s Chile unit has issued UF1.5m ($65.3m) in 2035 local at 107.10 with a 4.50% coupon to yield 4.08%, a spread of 48bp over the UF-20 benchmark, says Scotia Sud Americano Corredores de Bolsa, which managed the sale. Demand soared to UF5.2m, it adds. The notes are rated AA+ by Fitch and AA minus by Feller. Proceeds will be used to finance long-term assets.

Banco Santander Chile has sold $500m in 2012 floating rate bonds, in what its lead managers claim is the first short-dated floater in Latin American history. It priced the bond at Libor plus 125bp. Demand was heard at more than $1bn, focused mainly on US high-grade accounts. Deutsche Bank and Santander managed the deal, rated A+/Aa3. In December, the bank reopened its 2.875% 2012 for $300m, in a deal also through Deutsche Bank and Santander that yielded 2.657%, or UST plus 138bp. Proceeds are for general bank purposes.

Market consensus sees Chile’s central bank keeping the monetary policy rate unchanged at 0.50% today. The rate has been at that level since July. Morgan Stanley believes Chile’s central bank will remain on hold this month. It is pushing forward expectations for tightening, with policy rates ending the year at 2.75% from 2.00% previously, reaching 5.00% by December 2011. Chile’s Celfin also foresees rates on hold this month, adding that tightening may begin in the second half of the year, ending 2010 at 2.5%.

Chile water utility has placed UF2.75m ($112m) in local bonds in 2 tranches. It sold UF1.00m in a 6.5-year tranche priced at 100.0 with a 2.90% coupon to yield 2.90%, a spread of 68bp over the central bank’s BCU5 bonds, says Larrain Vial DCM banker Eric Vucina. A 21.0-year UF1.75m tranche priced at 101.61 with a 4.20% coupon to yield 4.08%, a spread of 43bp over the BCU5. Vucina claims this as the lowest spread yet for a non-guaranteed corporate bond in Chile. Total demand soared to UF12.00m, the underwriter says. Larrain Vial and BBVA handled the sale. Proceeds will finance the company’s investment plans.

Taking advantage of a relative lack of investment-grade Chile supply, Sociedad Quimica y Minera de Chile has raised $250m, bringing its yield inside of the guidance range. The fertilizer and chemical producer priced the 2020 bond at 99.817 with a 5.500% coupon to yield 5.524%, or UST plus 170bp, well through 187.5bp area guidance. The order book reached $1.25bn, according to bankers on the deal, with mostly high-grade dedicated buyers. The bond was heard trading to yield UST plus 165bp at the end of the day Wednesday. Bankers on the deal say it was upsized to $250m from $200m. Proceeds from the transaction are marked for refinancing debt. Deutsche Bank and JPMorgan ran the sale, rated BBB/Baa1. It is SQM’s first bond since 2006, and the first Chilean corporate transaction since Colbun raised $500m in January.