May 24, 2010 / 8:17 PM / 9 years ago

UPDATE 2-Chile says Europe woes not a barrier for debt sale

* Chile sees market rewards in upcoming debt sale

* Chile has not set date yet for international debt sale

* Top rated Chile hold option of issuing local debt (Adds Fitch comments, debt details and background)

By Simon Gardner and Antonio de la Jara

SANTIAGO, May 24 (Reuters) - Europe debt woes will not be a barrier for Chile’s planned international debt sale this year to finance a multibillion plan to rebuild cities ravaged by a massive Feb. 27 earthquake, Finance Minister Felipe Larrain said on Monday.

Larrain added that Chile, which has one of the best sovereign credit ratings in the region, also holds the option of issuing local debt in pesos.

“Some people say we should wait until the scenario in Europe clears up. I think otherwise.” Larrain told foreign reporters in the capital Santiago. “Chile will be rewarded by the market.”

Larrain stressed Chile solid position as a country with little outstanding debt, but said there was no date set yet for the debt placement.

New conservative President Sebastian Pinera is moving to increase taxes, issue foreign and domestic debt and tap copper-boom savings to finance the state’s $8.4 billion share of post-quake reconstruction.

The 8.8-magnitude quake killed hundreds and ravaged cities and industries like forestry, steel smelting and fruit farming in south-central Chile. The mainstay copper industry was unharmed by the tremor.

Chile, one of the lowest risk countries in Latin America, will issue this year $1 billion of bonds denominated in dollars and $500 million of global bonds denominated in pesos, which the government says will be the first in its history. The debt sale is expected in coming months.

Debt strategies and investors see Chile securing good terms in the first debt issuance since 2004.

Fitch Ratings said on Monday the credit worthiness of the world’s top copper producer was intact after the massive quake, which should help Pinera secure financing for his four-year reconstruction package.

“Chile’s public finances offer ample room to accommodate the reconstruction needs due to its rules-based fiscal policy and very low public debt burden relative to similarly rated peers,” Fitch’s Casey Reckman said in a release.

Fears of Europe debt woes hampering global economic recovery has rattled markets and commodities like copper, which is by far Chile’s main export. —————————————————————————————- For a factbox on emerging sovereigns total 2010 debt service costs click on [ID:nLDE64N07P] — ————————————————————————————

European woes have hit the Chilean peso and stocks, but experts see the currency recovering losses thanks in part to both government and private reconstruction spending. [ID:nN20204419] (Reporting by Simon Gardner and Antonio de la Jara; Editing by Kenneth Barry)

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