TEXT-S&P rates Chile's proposed senior notes 'A+'
Oct 25 - Standard & Poor's Ratings Services said today that it assigned its 'A+' foreign currency senior unsecured debt rating to the Republic of Chile's proposed dual-tranche financing. The tranches of this financing consist of the issuance of two new U.S. dollar-denominated senior notes--one due in 2022 and the other one maturing in 2042. Our ratings on Chile incorporate its low debt burden, political stability, and very flexible and resilient economy. Chile has based its fiscal policy for many years now on a framework of rules that take into account cyclical changes in copper prices and estimations of the country's long-term GDP growth rate. The discipline of a rules-based fiscal policy has allowed the government to save money in a stabilization fund during years of buoyant growth and high copper prices. As a result, the government has ample flexibility during an economic downturn to sustain domestic demand by running moderate fiscal deficits, funded either by issuing debt or by drawing upon its fiscal reserves, without eroding its financial health. A floating exchange rate, combined with a track record of low inflation, also provides Chile with some insulation against adverse external shocks. The rating constraints are a narrow economic base and a comparatively low level of per capital income. RELATED CRITERIA AND RESEARCH Sovereign Government Rating Methodology And Assumptions, June 30, 2011 RATINGS LIST Republic of Chile Foreign currency Sovereign credit rating A+/Positive/A-1 New Rating Senior unsecured notes due 2022 and 2042 A+ Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.
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