Category: Chile

Moody’s downgraded the ratings of Chile highway developer Sociedad Concesionaria Vespucio Norte to Ba1 from Baa3 to reflect worse than expected financial results. The ratings have been placed on review for further downgrade. Moody’s blames poor results on traffic figures that continue to fall below original projections. Slower than expected ramp up is in part due to delays in construction and opening of the San Cristobal Tunnel, as well as various other delays in construction, which coupled with even relatively moderate reduction in traffic brought about by the global economic crisis results in cash flows that are insufficient to cover scheduled debt service. May 20, S&P downgraded the company to BB from BBB minus with stable outlook because of weak traffic figures and worse than expected financial results.

Chile’s Caja de Compensacion Los Heroes has sold CLP53bn ($95m) in domestic bonds backed by consumer loans. The 2019 bonds with a 3.5-year duration priced at 98.75 with a 7.50% coupon to yield 7.75%. Proceeds will support lending capabilities at the Caja, which is a type of non-profit social lending institution in Chile. It is the third such securitization from Los Heroes. Banchile managed the deal, rated AA on a national scale.

Inversiones Southwater, an Ontario Teachers Pension Plan-controlled holdco for 4 Chilean water assets, has sold $272m-equivalent in inflation-linked bonds in the domestic market. Southwater priced UF2.2m ($83m) in 2014s at 100.41with a 2.9% coupon to yield 2.75%, and UF5m in 2034 bonds at 101.67 with a 4.7% coupon to yield 4.58%. It will use proceeds from the A+ rated sale to repay debt tied to the acquisition of the four operating companies – Essbio, Esval, Nuevosur and Aguas del Valle. Santander managed the transaction. Southwater is the second largest water utility in Chile, with 36% of the market.

Chilean power transmission company CGE Transmision is planning to sell up to $132m-equivalent in domestic bonds denominated in the UF inflation-indexed unit, it says. It will have the option of offering up to UF1m ($38m) in 3.0% 2016 bonds featuring a 2-year grace period and up to UF3.5m in 4.3% 2039s featuring a 15-year grace period. The total size of the AA/AA minus offer won’t exceed UF3.5m. The issue is expected later this month, with investor presentations beginning this week, according to a company official.

As expected, Chile’s central bank has kept its monetary policy rate at its historic low of 0.5%. The board reiterates that the rate will be held at this level “for a prolonged period” and that it will aim for projected annual inflation to reach 3.0%. Annual inflation stands at minus 1.0%, the bank says. “We expect the board members to be comfortable with maintaining the current exceptional level of monetary accommodation for a prolonged period, as the Chilean CPI continues to decline although real sector dynamics seem to be doing better,” according to Chile’s Celfin Capital. Bulltick Capital expects the rate to stay at this level until the second quarter of 2010.

Chile’s Celfin Capital has acquired a 20% stake in cable TV and telephone service company VTR GlobalCom held by Cristalchile for CLP167bn ($304m), the seller says in a filing with the local securities commission. The deal is expected to close November 6.

Chile’s Celfin Capital and Goldman Sachs have joined forces to sell derivatives to institutional investors in Chile, Jorge Errazuriz, Celfin’s vice chairman, tells LatinFinance. He explains that the derivatives market is still in an early stage of development in Chile, but sees great potential as AFPs, the local pension funds, have around $105bn available to invest.

Chile’s Banco del Estado has sold $76m equivalent in domestic inflation-linked bonds. The bank priced UF2m ($76m) in 2029 bonds at 97.38 with a 4.00% coupon to yield 4.20%, or 80bp above Chilean government bonds. Banco del Estado’s own brokerage unit coordinated the sale, rated AAA on a national scale. The issue comes from a UF30m shelf, from which Estado sold UF5m in 3.5% 10-year bonds in June.

Chile’s domestic bond market has seen glassmaker Cristalerias de Chile sell $76m-equivalent in inflation-linked bonds and leasing company Factorline place CLP20bn in peso-dominated bonds. Cristalerias sold UF1m ($38m) in 2014 bonds at 100.04 with a 3.25% coupon to yield 3.24%, and UF1m in 2030s featuring a 2-year grace period at 97.95 with a 3.75% coupon to yield 3.98%. Proceeds from the sale, rated AA on a national scale, will refinance debt. IM Trust led. Separately, Factorline sold CLP20bn ($36m) in 2014 bonds at 99.89 with a 7.00% coupon to yield 7.00%. The leasing company controlled by Grupo Massu plans to use proceeds to support the growth of its auto loan portfolio. Banchile is managed the sale, rated A minus on a national scale.