Chile Expects More ‘Huaso’ Bond Sales in Coming Months, Larrain Says

Chile’s government expects foreign entities to sell bonds in the South American country in the coming months after it relaxed rules in a bid to deepen local capital markets, Finance Minister Felipe Larrain said.

The Inter-American Development Bank and private companies are among entities to show interest in so-called huaso bonds, peso-denominated notes issued by foreigners, Larrain said today in an interview at the IDB’s annual meeting in Calgary.

“Over the next couple of months we will probably see some” issuances, he said. “We are seeing a lot of interest. The IDB is one example, but there is a lot of examples of private companies.”

The administration of President Sebastian Pinera wants to make Chile a financial hub in Latin America. Authorities are expanding the possible universe of foreign issuers to states, companies from emerging markets and multilateral organizations, Larrain told reporters in Santiago on March 10.

Under the changes, entities from countries with at least three sovereign credit ratings will be able to sell bonds denominated in Chilean pesos. Previously, authorization was limited to entities that traded in exchanges recognized by the local credit rating regulator. Huaso is the Chilean term for cowboy.

Only three peso-denominated bonds, totaling less than $500 million, have been issued by foreigners since they were allowed to do so in 2006, Larrain said March 10. The most recent was America Movil SAB, Latin America’s largest wireless phone operator, which sold $198 million of 25-year inflation-linked notes at a yield of 4 percent in May. Banco de Credito del Peru sold bonds in 2009.

“I would not be surprised to see a lot of Brazilian companies issuing bonds in Chile,” Larrain said today.

To contact the reporter on this story: Fabiola Moura in New York at fdemoura@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at Papadopoulos@bloomberg.net

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