September 8, 2011 / 1:10 AM / 7 years ago

Chile places $1 bln dlr sovereign, reopens peso bond

 * 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
 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
 "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
 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
 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
 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)

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