Chile Sells 1.4 Billion Euros of Bonds to Tap Into Lower Rates

Chile sold 1.4 billion euros ($1.5 billion) of bonds as Latin America’s highest-rated sovereign borrower took advantage of lower interest rates in Europe.

The government said Tuesday that it issued 950 million euros of 15-year notes to yield 2.02 percent and 440 million euros more of bonds due 2025 to yield 1.47 percent, adding to the 800 million euros of the notes already outstanding.

The South American country, which last sold euro-denominated bonds in December, is planning to increase investment, which fell 1.7 percent in the first quarter from a year earlier after gaining 0.5 percent in the previous three months. Chile joins emerging-market countries and companies seeking to lock in lower interest rates as the European Central Bank carries out its quantitative-easing program.

With the new bonds, Chile “was able to create a new benchmark interest rate for Chilean companies seeking financing in international markets by continuing to support the building of a yield curve in euros,” Finance Minister Rodrigo Valdes said in a statement distributed to reporters in Santiago.

The yield on the 15-year bonds is the equivalent of 0.75 percentage point more than midswaps.

Chile’s 2025 euro-denominated bond yield fell 0.28 percentage point since it was issued Dec. 3 at 1.745 percent. The nation paid a higher price to issue in euros than it would have in dollars in a bid to pave the way for other Chilean issuers to sell debt in the European currency, Alberto Arenas, who was then Finance Minister, said at the time.

President Michelle Bachelet fired Arenas last week as finance minister and replaced him with Valdes, a former deputy director of the International Monetary Fund.

Chile is rated the equivalent of the fourth-highest investment grade rating by Moody’s Investors Service and Standard & Poor’s at Aa3 and AA-. Fitch Ratings ranks the nation a step lower at A+.

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