Category: Chile

Chilean retailer Cencosud plans to ask shareholders to approve a capital increase worth about $170m. The increase will go to a vote April 25, and would involve issuing 40m new shares. Cencosud stock traded between CLP1,820 ($4.18) and CLP1,910 ($4.39) this week.

Spain’s Iberdrola has agreed to sell its 51% stake in Chile’s Empresa de Servicios Sanitarios de los Lagos to Aguas Andinas. Local media reported that the Santiago-based water unit of Sociedad General de Aguas de Barcelona agreed to pay close to EUR105m for the 488.7m shares. The deal is expected to finalize in the coming weeks.

Fitch has affirmed the BBB- foreign and local currency IDRs and A national scale ratings of Chilean board products manufacturer Masisa with a negative outlook due to the company’s high leverage for the rating category. During 2007 and the first quarter of 2008, Masisa has initiated a number of transactions that are designed to lower leverage significantly. However, none of these transactions have closed. In 2008, Masisa’s Ebitda should increase to more than $215m, despite the potential loss of $4m of Ebitda due to the sale of the company’s oriented strand board plant in Brazil and the weakness in the US housing market, the agency says.

GrupoNueva has bought CLP80.5bn ($179m) in shares of Chilean wood board maker Masisa. The Chilean investment group paid CLP115m per share for 700m shares, increasing its stake in Masisa to 65% from 35%. This was a premium of 15% to the previous day’s close of CLP98.01. IM Trust managed the transaction.

Sodimac, a unit of Chilean retailer Falabella, priced CLP29.69bn ($68m) in 2012 notes denominated in the UF inflation-linked unit, it said Wednesday. The notes priced at 98.70 to yield 2.80%. IM Trust managed the sale.

Chile’s Parque Arauco has issued CLP69.27bn ($158m) in bonds denominated in UF, the local inflation-linked unit. The shopping mall developer and operator placed CLP24.74bn in 2018 with a 3.7% coupon at 103.82 to yield 2.97%. It also priced CLP44.53bn in 2029 bonds with a coupon of 4.30% at 105.79 to yield 3.79%. Demand for the issue reached CLP72.94bn. The bonds are backed by a mortgage on Arauco’s flagship Terrenas Parque Arauco mall in Santiago. Proceeds will be used to finance the company’s $1bn 2007-2009 investment plan, and refinance existing debt. Arauco operates shopping malls in Chile, Argentina and Peru.

Hit by drought and high commodity prices, Chile could be facing a significant electricity generation crisis in the next two years, according to Fitch. Firms like Colbun and GasAtacama, which rely heavily in natural gas or hydro electrical power for generation, signed contracts at prices that did not foresee the current crisis and could see financial flexibility affected, the agency adds. The least affected companies are those that have been using coal as their main energy source, such as Endesa-Chile and Guacolda. Chile has been trying to lessen dependence on Argentine natural gas by modifying existing natural gas fired plants and building new thermal facilities based on alternative fuel sources. Companies are also investing in regasification plants for LNG, and the government is promoting exploration of other energy sources. “These developments combined with the opening of new hydro plants should allow for a drop in generating costs, and electricity prices should come down once the first LNG project is completed in 2009/2010 and at least 1,000 megawatts of coal-based generating capacity comes on stream during that same period,” Fitch says.

Chile’s Scotiabank Sud Americano has sold UF4m ($183.2m) in 2016 bonds denominated in UF inflation-linked unit at 2.81%. Proceeds from the transaction, rated AA+ on a national scale by Fitch, will be used to finance long-term assets and reduce exposure to market risk. Scotia managed the sale.

Chilean banks continue to boost margins, according to Fitch, which notes a slowing on lending growth. Commercial loans to SMEs have become more relevant to Chilean banks’ total portfolios as the economy continues to grow, driving additional investment in the sector, the agency adds. “Margins in the industry continue to improve, fueled by a larger component of retail lending, higher leverage and the recent decrease in technical reserve requirements, which resulted in a reduced effective cost of funds,” says Carola Saldias, director in Fitch’s LatAm financial institutions group. Fitch believes the operating environment in 2008 will be more challenging for banks as a consequence of tighter liquidity, due to the reduction in financing from pension funds, lower spreads as a consequence of increased competition and the resulting increase in funding costs. It also predicts a reduction in profitability due to a less-favorable economic environment and high volatility in capital markets.

Chile will offer a 30-year local bond as part of the $1.1bn equivalent in local debt it plans to issue this year, its finance ministry said. That would be the first domestic offering of that tenor, catching up with Mexico, which led the way in developing local market tenors. This year, Chile plans to issue $200m in 10-year peso-denominated bonds, UF10.2m ($460m) in notes denominated in the UF inflation-linked unit, and UF10.2 in 30-year UF-denominated bonds. Regular monthly auctions will begin March 26 and continue until December. The UF Monday was equivalent to CLP19,679, or $44.74.