Category: Chile

Chile’s state-owned railway company, Empresa de Ferrocarriles del Estado (EFE), has issued $84 million worth of inflation-linked local bonds (UF2.4 million), maturing in 2036 and carrying an annual interest rate of 4.4%. The notes are part of the company’s Series T offering and are rated AAA. And local retailer Cencosud is to make its second debt offering this year when it sells up to $43 million worth of bonds on Friday. The bonds will mature in May 2011. Meanwhile, Electricity distributor EMEL, controlled by US company PPL Global, is to offer $211 million worth of bonds (UF6 million) in two series. One series offers maturity of 10 years, while the other matures in 30 years. The first tranches of the first series will be for up to $105 million worth of five-year bonds and for the second series up to the same amount of 21-year bonds.

Chile’s external debt rose from $44.9 billion at year-end 2005 to $45.4 billion at the end of the first quarter of this year, an increase of 1.17%. Most of the debt – 79% or $35.7 billion – was accounted for by the private sector. Around 84% of the total external debt is long term.

Chile’s trade surplus for the four months through April this year rose 50%, year-on-year, to $5.6 billion versus $3.9 billion in 2005. Exports for the period rose 26.2% to $16.2 billion, driven by the continuing high demand for copper, while imports were up only 16.3% to $10.7 billion.

Chilean financial institution Celfin Capital has signed an agreement with international investment bank Merrill Lynch that allows Celfin customers to invest in international markets using Merrill Lynch’s network, and allows foreign investors to invest in Chile.

Germany’s K&S, the world’s third-largest potash producer, has agreed to buy 99.3% of Latin America’s largest salt producer, Chilean Sociedad Punta de Lobos, for $480 million. K&S said it plans to make an offer for the outstanding shares in the near future.

Spain’s second-largest bank, Banco Bilbao Vizcaya Argentaria (BBVA), has bought a 51% stake in Chilean financial firm Forum for $104 million. Forum is Chile’s largest auto financing firm with a 12.4% share of the local market and more than 90,000 clients. Current shareholders will retain the remaining 49% of the company’s capital.

The International Finance Corporation (IFC), the private-sector arm of the World Bank, has committed $6.5 million to the Fondo de Inversión Forestal Lignum, a $39.4 million Chilean private equity forestry fund, recently launched to enable small and medium landowners to maximize the value of their landholdings. The Lignum Fund and the proposed forest-backed securitization are innovative financial instruments that offer an alternative capital market funding source for the forestry sector.

Chilean pulp, paper and paperboard manufacturer Compania Manufacturera de Papeles y Cartones (CMPC) has issued $135 million worth of local inflation-linked bonds. The bonds, which mature in 2027, were issued in Unidades de Fomento (UF), Chile’s inflation-linked currency unit. The money raised from the issue will be used to fund expansion. The company operates in Chile, Argentina, Mexico, Uruguay and Peru.

The Chilean government has confirmed that there has been a new gas find in the southern region of the country. Studies will be carried out to evaluate how to extract and commercialize the discovery. The find is a result of exploration work that began in 2003 in Tierra del Fuego. If it proves to be high yielding, the new gas field will be a welcome boost to Chile’s energy needs. Currently, the country imports 22 cubic meters of gas daily from neighboring Argentina but has suffered repeated shortages in recent times due to rising demand within Argentina.