Chile to Meet Bond Investors Abroad as It Considers Debt Sale

Chile, the nation with the highest credit rating in Latin America, will meet bond investors next week in the U.S. and Europe to analyze market conditions for an eventual debt sale, the government said.

The South American country appointed Citigroup Inc., HSBC Holdings Plc and Banco Santander SA to arrange the meetings, according to an e-mailed statement from the Finance Ministry. The government’s team will be headed by Deputy Finance Minister Alejandro Micco, the statement said.

The move comes as developing countries, including neighboring Colombia and Peru, tap international markets before the U.S. Federal Reserve begins raising interest rates. Chile, whose fiscal deficit is forecast by economists to widen, last offered dollar-denominated bonds overseas in October 2012, when it sold $1.5 billion of 10- and 30-year debt.

“Chile has higher financing needs given its widening budget deficit,” Mario Castro, a Latin America strategist at Nomura Holdings Inc., said in a telephone interview from New York. “It makes sense for them to tap the market, and it’s a good time before U.S. rates go up.”

A transaction denominated in euros or dollars or both may follow, subject to demand and regulatory approval, according to a person familiar with the matter who isn’t authorized to speak publicly and asked not to be identified.

U.S. policy makers are watching the outlook for inflation as they weigh the timing of the first interest-rate increase since 2006, which most officials expect to happen next year. The Fed last month ended a bond-purchase program intended to boost growth, citing improvements in the labor market.

Economic Estimates

Chile’s fiscal deficit is forecast to widen to 2 percent of gross domestic product this year from 0.9 percent in 2013, according to the median estimate of economists in a Bloomberg survey. The economy is forecast to slow to 1.9 percent in 2014 after expanding 4.11 percent last year. The nation’s Aa3/AA-/A+ sovereign credit ratings match those of China and Japan.

The meetings will be held in cities including Amsterdam, Paris, Frankfurt, Munich, London, Boston and New York, according to the statement.

“The economy isn’t going through its best moment, but it’s a solid credit,” Castro said. “No doubt there’s appetite for Chile.”

Peru tapped the international bond market Oct. 30 for the first time in two years as it bought back debt to reduce borrowing costs and extend maturities. Nine days earlier, Colombia sold $1 billion in bonds to fund next year’s budget.

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