* Chile government returns to international debt market
* Yield of 3.3 pct lowest in Chile debt history
* Government seeks to set benchmark for corporates
SANTIAGO, Sept 7 (Reuters) - Chile's government said on Wednesday it had successfully placed a $1 billion 10-year dollar sovereign bond in New York, and had reopened for a further $350 million a peso bond issued last year.
The dollar bond was priced at 130 basis points over U.S. Treasuries, IFR, a Thomson Reuters service, said earlier on Wednesday.
Finance Minister Felipe Larrain said from New York the bond issue, which follows on from a $1.5 billion sovereign issue last year, was aimed at creating a benchmark to enable Chilean companies to access international credit markets.
Larrain said that as in 2010, most of the proceeds of the bond issue would be held abroad, to avoid stoking the local peso CLP=CL, which is trading near 3-year highs. He said the proceeds would be used to pay down debt set to come due.
"We have just placed a $1 billion 10-year bond, denominated in dollars, with a final yield of 3.3 percent, marking a new record low for Chilean issues since 1882," Larrain said in a statement.
"It is the lowest-ever coupon paid by a Latin American issuer," he added, saying the Chilean government had sought to capitalize on low U.S. rates. "It makes economic sense ... that Chile can indebt itself at such low rates at times of external uncertainty."
He said the reopening a peso bond placed last year for a further $350 million was aimed at boosting that bond's liquidity in the secondary market and helping foster the internationalization of the local peso CLP=CL. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For a TAKE A LOOK on Chile economy [ID:nN26HILEFI] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
The bond issues come as Chile's economy, Latin America's most stable, starts to slow against a backdrop of global uncertainty fueled by European debt woes.
Chile's central bank chopped its 2011 inflation forecast and narrowed its economic growth forecast range on Wednesday and signaled it would hold interest rates steady in the near-term.
The bank now sees the economy of the world's top copper producer expanding by between 6.25 percent and 6.75 percent this year, compared to a previous outlook for 6.0 percent to 7.0 percent growth, it said in its quarterly monetary policy report.
It sees 2011 inflation at 3.3 percent, down from a previous view of 4.0 percent forecast in June, within the bank's 2.0 to 4.0 percent annual tolerance range, and sees inflation holding around its 3 percent target.
Chile's central bank has halted an aggressive interest rate hike cycle as growth moderates and private inflation expectations ease, and is seen holding the rate in coming months at 5.25 percent, with a possible cut eyed by March. (Writing by Simon Gardner)