Category: Chile

Chile’s Codelco, the world’s largest copper producer, sold $500 million 30-year bonds on Friday, the longest ever maturity on its debt. The company sold the 5.625% bonds due in 2035 to yield 5.75%, 1.18 percentage points more than US Treasuries. The sale was managed by Deutsche Bank and JPMorgan Chase & Co. The money will be used to refinance Coldelco’s debt as it borrows to boost production in the face of surging demand.

The Chilean government again raised economic growth forecasts, thanks to buoyant copper prices and strong domestic activity. The Economy Ministry forecasts GDP growth this year at 6.2%. It also expects a record investment rate of 27% of GDP.

Chile’s London-listed Antofagasta mining group posted a 78% leap in first half pre-tax profits, thanks to record prices for its two main products, copper and molybdenum. Revenues from its three copper mines in Chile, its South American water and rail businesses rose to $1.12 billion from $753 million in the same period of 2004. Pre-tax profits rose to $739.5 million from $415.4 million.

Presidents Ricardo Lagos of Chile and Eduardo Rodríguez of Bolivia are to meet on Thursday in New York for the first time since Rodríguez took office in June. The meeting will be held against the backdrop of the UN’s 2005 World Summit taking place this week. Relations between the two countries have warmed in recent years with Chile offering to Bolivia’s then president, Carlos Mesa, at the 2004 Summit of the Americas to re-establish bilateral relations with Bolivia. The two countries broke off diplomatic relations in 1978 following a century-long dispute regarding Bolivia’s access to the sea and only maintain ties at consular level.

Chilean voters are likely to elect Michelle Bachelet as president in December. Polls confirm that Bachelet, a Socialist, and defense minister in the ruling coalition, will easily beat her conservative rivals Joaquín Lavín of the Democratic Independent Unity and Sebastián Piñera of the National Renewal Party.

Chile’s trade surplus widened to $698 million in August as prices for copper, the country’s main export, rose to record highs. The trade surplus was $583 million in July. The economy will grow more than 6 percent this year, according to the central bank estimates, and that growth is driving up demand for imported cars and heavy equipment. August exports increased 20 percent from a year earlier while imports increased 33 percent.

Chile’s economy grew 4.4% year-on-year in July, the slowest pace in 18 months, as mining output fell and surging oil and gas prices hurt manufacturing. The country expanded 6.4% year-on-year in June. The pace of growth is likely to pick up later this year as domestic demand from businesses and consumers and private investment remain strong, the Central Bank said in a report last week.

Chile’s independent central bank increased its growth forecast for 2005-2006 to as much as 6.5% for this year. The revision is part of its latest monetary policy report to Congress. The Bank says real GDP growth will be 6.0%-6.5% in 2005, higher than its previous forecast of 5.25%-6.25%. The bank expects growth next year to come in at 5.25%-6.25%. Investment, which is driving growth, should rise by 19% in real terms this year, up from an earlier estimate of 14.0%.

Chile’s central bank said inflation will be 3 percent this year, above its previous forecast of 2.3 percent, as oil prices surge and domestic demand from business and consumers rises. The bank, which meets September 8 to decide whether to change its benchmark rate, reiterated the expectation that it will increase the rate gradually. Interest rates will rise to a “neutral” stance, in terms of economic stimulus, by August 2007, the bank said.

Spanish power company Endesa plans to invest $420 million in Chile over the next four years, 60 percent of the company’s total investments in Latin America. The company will invest $120 million in Argentina and $100 million in Colombia. Endesa is looking to increase the share of renewable energy in its total power generation capacity to 39 percent by 2009.