Cencosud SA (CENCOSUD), the third-largest retailer by sales in Latin America, led losses among Chilean stocks that depend on sales from Argentina after that country devalued its currency.
The shares fell for a fourth straight day, declining 5 percent to 1,595.1 pesos at the close in Santiago, the lowest level on a closing basis since December 2009. Power generator AES Gener SA dropped 4.1 percent, brewer Cia. Cervecerias Unidas SA retreated 2 percent and soft-drink bottler Embotelladora Andina SA dropped 2.3 percent.
“Chilean companies are the ones in the region with the highest exposure, and that is why they’re falling more,” Eric Conrads, a money manager who helps oversee $500 million in Latin American stocks at ING Groep NV, said in a telephone interview from New York.
Cencosud, a Santiago-based company controlled by billionaire Horst Paulmann, got 26 percent of third-quarter revenue from Argentina, where the peso sank 12 percent yesterday. Policy makers are seeking to stem a financial crisis and restore investor confidence by reversing measures that drove foreign reserves to a seven-year low.
Cencosud will probably get 15 percent of its 2013 earnings before interest, tax, depreciation and amortization from Argentina, Banco de Credito e Inversiones wrote in an e-mailed research note to clients.
The extra yield, or spread, investors demand to buy Cencosud’s bonds due in 2023 instead of U.S. Treasuries rose 48 basis points, or 0.48 percentage point, to 348 basis points in the past two days. That’s the highest spread since the bonds were sold in 2012. The 29 basis point increase today is the biggest among investment-grade Chilean bonds.
Embotelladora Andina, Chile’s largest Coca-Cola bottler, sees “no major” effects on its production costs from the peso depreciation because it hedged costs by setting price for raw materials in advance, according to Chief Financial Officer Andres Wainer.
“Andina has been in Argentina since 1995 and has weathered devaluations before,” Wainer said in a telephone interview from Santiago.
Brazilian concert promoter T4F Entretenimento SA (SHOW3) was unchanged in Sao Paulo after falling 2.5 percent. The company got 21 percent of its sales from Argentina in 2012.
T4F has been hedging 100 percent of its payments in dollars in Argentina and Brazil, Guilherme Ferreira, the chief executive officer of asset manager Teorema Gestao de Ativos Ltda. and a shareholder of T4F, said by e-mail today.
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