Category: Chile

Chilean Banco Security has succeeded in selling $40.5 million subordinated inflation-linked local bonds from an offering that was more than twice oversubscribed, according to the bank. The bonds carry an annual interest rate of 4.57% and mature in 2028. The securities earned an A+ rating from agency Fitch Rating. The offering was managed by Valores Security SA Corredores de Bolsa.

Chile’s BancoEstado has also issued local inflation-linked bonds worth $85 million (UF2.5 million). The bonds carry a maturity of 25 years and an annual interest rate of 4.2%. Fitch Ratings awarded the bonds an AA+ rating. BancoEstado Corredores de Bolsa managed the issue, money from which will be used to fund the bank’s expansion plans.

Chile’s consumer prices rose 0.5% in July, compared with June, faster than the average forecast by economists. Higher gas prices have contributed to a rise in energy costs to drive up prices overall and the threat of hikes in the cost of natural gas from Chile’s main supplier Argentina looks set to increase inflationary pressures. The price rise in July took cumulative inflation for the year to 2.6% and inflation for the 12 months to end-July to 3.8%, near the top range of 4% set by the Central Bank.

Chilean retailer Falabella has issued $286 million worth of local inflation-linked bonds (UF8.5 million). The company issued the securities in two series: Series E carries a five-year maturity and an interest rate of 3.74% and Series F a 21-year maturity and interest rate of 4.42%. Falabella is using the capital-raising to help fund its ambitious $1.13 billion, four-year expansion plans. The Chilean retailer is looking to overtake rival regional retailer Walmex of Mexico, currently the sector leader in Latin America.

Chile’s leading salmon producer, AquaChile, is to join forces with Alitec, a subsidiary of Dutch animal nutrition provider Provimi to produce fish-food at a plant in the south of the country. The companies have signed a joint venture agreement to work together to develop saltwater fish feed at Alitec’s existing plant at Pargua. Salmon is Chile’s fourth-largest export after being introduced into the country in the 1980s. Chile hopes to overtake Norway to become the world’s leading producer of the fish.

Chilean retailer Falabella is to issue local inflation-linked bonds worth $287 million (UF8 million). The company will issue the securities in two series: Series E will carry a five-year maturity and Series F a 21-year maturity. Falabella is using the capital-raising to help fund its ambitious expansion plans. The Chilean retailer is looking to overtake rival regional retailer Walmex of Mexico, currently the sector leader in Latin America, with a market value of $26 million compared with Falabella’s $7.4 million.

British American Tobacco has offered to buy the outstanding 30% of its Chilean subsidiary, Chiletabacos, for $191 million. BAT offered to buy 20.7 million shares at a price of $9.2 per share, around 33% over market price. BAT said it was taking control of its subsidiary in order to simplify its capital structure and enhance earnings per share. Chiletabacos is Chile’s largest cigarette maker.

Chilean investment abroad rose 68% in the first half of this year compared with the same period in 2005. Most of the $4 billion invested outside Chile was made by financial sector companies – including insurance, real estate and services ($3.1 billion), followed by mining ($437 million), trade ($203 million), utilities ($169 million), industry ($97 million) and construction ($33 million). The top destination for investors is the United States ($3.5 billion), the United Kingdom ($345 million) and Germany ($82 million).

Chilean iron and steel producer Cintac, owned by Compañía Aceros del Pacífico (CAP), has taken control of local manufacturer Centroacero for $15.26 million. It bought 45% from its holding company Invercap for $6.7 million; paid $6.69 million to buy a 43% stake from Inversiones Agroindustriales and $1.87 million to acquire a 12% share held by Emetres.

Part of Chile’s plan to improve its competitiveness will see local companies allowed to issue peso debt abroad, as well as enabling foreign corporate issuers to launch debt securities in Chilean pesos. Chile’s finance minister, Andrés Velasco, has outlined a 15-point plan to make the country’s economy more competitive. The plan, which includes measures to reduce payments for corporate tax laggards and reduce stamp duties also aims to modernize and deepen financial markets and increase their integration with international markets, hence the change in regulations concerning corporate issuers.