Category: Chile

Executives of Chilean retailer Centros Comerciales Sudamericanos (Cencosud) will travel to New York in the next week to negotiate a syndicated loan of $700 million from a group of banks led by Spanish BBVA. Cencosud is looking to restructure liabilities of $1.0 billion, including those of the department store chain Almacenes Paris, purchased in March. The company owes $300 million in short-term debt payments.

Chile’s economy grew 5.7 percent year-on-year in the first quarter, boosted by copper exports. Machinery and equipment investments grew 45 percent and the construction sector expanded 14 percent. Internal demand has increased 11 percent in the last twelve months.

Chinese state-owned Minmetals will provide Chile’s copper company Codelco with $500 million as part of a long term contract for copper. Further discussions could increase that figure to $2 billion. Codelco is benefiting from strong copper demand from China and is looking to ramp up production in Chile over the next five years.

Chile’s state-owned copper company Codelco plans to sign the first of a series of agreements worth up to $2 billion with Chinese state metals company Minmetals in the next few days. Codelco will repay Minmetal in copper. Codelco, the world’s largest copper producer, has several projects in the pipeline including the $900 million Alejandro Hales mine and the $500 million-$600 million Gaby mine, both in northern Chile.

Former foreign minister Soledad Alvear dropped out of Chile’s presidential contest and threw her weight behind Michelle Bachelet, the former defense minister and current frontrunner. Both women are from the center-left Concertacion coalition, which has governed Chile since the country’s return to democracy in 1990. Bachelet now faces ex-mayor of Santiago Joaquin Lavin and businessman Sebastian Pinera, who are vying to be the conservative Alianza por Chile’s presidential nominee. The election will be in December.

Chile, the world’s largest copper producer, passed a bill that will increase taxes on mining companies by as much as 5 percent. The new tax will make mining in Chile costlier for companies such as BHB Billiton and Phelps Dodge, the world’s second-biggest copper producer. The government estimated last year that the tax would boost its revenue by about $145 million annually at prices of 90 cents a pound. Copper prices have jumped to $1.37 a pound, largely on increased demand from China.

Chile’s copper exports rose to $1.34 billion in April, up 6 percent year-on-year. The central bank said that dwindling supplies and higher demand pushed copper prices to a 16-year high. Chile, which produces a third of the world’s copper supply, has benefited from a surge in demand spurred by economic expansion in China, the world’s biggest copper consumer.

Chile’s state-owned copper producer Codelco issued inflation-linked bonds worth $210 million that are set to mature in 20 years. The yield on the debt is 3.29 percent over inflation, or 24 basis points above a Chilean government bond of similar maturity. The bond will be used to help finance Codelco’s $393 million purchase of Fundicion Ventanas.

Chile’s trade surplus widened to $1.07 billion in April as copper prices surged to 16-year highs. Copper prices have climbed 24% in 12 months, spurred by demand in India and China, the world’s largest consumer of the metal. Chile’s overall exports rose 25% to $3.44 billion, while imports surged 36% to $2.37 billion.

Standard & Poor’s has revised its outlook to negative from stable on Chilean state copper company Codelco’s A+ local currency corporate credit rating. S&P lowered the outlook as a result of the “expected weakening of the company’s financial profile” due to Codelco’s ambitious expansion plans and high dividend distributions. At the same time, S&P confirmed Codelco’s local and A-grade foreign currency corporate credit ratings and maintained the stable outlook on the company’s foreign currency corporate rating.