Chile to Sell $10 Billion in Peso Bonds This Year

Chile’s central bank will sell $10 billion in peso-denominated and inflation-linked bonds to mop up liquidity from its plan announced yesterday to purchase dollars to stem a rally in the peso.

Chile’s central bank plans to start buying $12 billion in the foreign-exchange market tomorrow in an unprecedented bid to weaken the peso, Latin America’s best-performing currency in the past year. The central bank said yesterday it will buy $50 million a day from Jan. 5 until Feb. 9, the second time in less than three years Chile has tried to fight currency appreciation.

To offset the effects of the dollar-buying plan, the bank said today it will sell $10 billion worth of peso-denominated bonds and Chile’s inflation-linked accounting unit. Another $2 billion in short-term instruments will also be used, the bank said in a statement on its website.

The bank said it will sell $1.3 billion of inflation-linked bonds due in 20 years and another $1.3 billion due in 30 years. It will sell $2.1 billion of 10-year inflation bonds and $2.5 billion of five-year inflation bonds and $1 billion of two-year inflation bonds.

In pesos, the bank will sell $1 billion of 10-year bonds, $1.5 billion of five-year bonds and $493 million of two-year bonds.

The bank said it plans to sell the bonds between February and December. As part of its 2011 financing plan, the bank said it also intends to refinance $1 billion in debt maturing this year.

To contact the reporter on this story: Randall Woods in Santiago at rwoods13@bloomberg.net; Sebastian Boyd in Santiago at sboyd9@bloomberg.net

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net