Chile Seeks Longer Maturities

The Chilean government plans to raise $6bn equivalent in the local market in 2012 through peso and inflation-linked UF-denominated bonds, including its first ever 20-year. The idea is to lengthen maturities in its domestic curve and encourage the use of long-term nominal peso-denominated paper among corporates, similar to what happens in developed markets. The finance ministry expressed an interest in seeing more long-term mortgage bonds denominated in pesos, which at the moment comprise only 1% of this market. The sovereign hopes to issue up to CLP500bn ($976m) of nominal 10-year bonds and up to CLP280bn of 20-year paper. It is also targeting up to 23m UFs of 5-year paper, up to 13m UFs of 7-year bonds, up to 26.5m UFs 10-year issues, and up to 16.5m UFs of 20-year paper. At the same time, finance ministry plans to inject another $1.7bn in its economic stabilization fund (FEES) as it looks to build a liquidity buffer against any deterioration in the broader international markets.