(Bloomberg) — Chile is tapping international debt markets with the sale of dollar and euro-denominated bonds, joining countries from Mexico to Hungary in what is shaping up to be a busy week for issuance.
The South American country is offering up to 1.7 billion euros worth of seven-year social notes in a deal that could be priced on Tuesday. It is also selling $1.6 billion of 12-year bonds. Information about the deal came from people familiar with the matter, who asked not to be identified because they were not authorized to speak about it.
The sale leads to a rush of deals in the credit markets. A record number of borrowers took advantage of spreads between investors in Europe on Tuesday, the lowest in three years. Slovenia sold 1 billion euros of bonds and Hungary has backed out of a debt deal.
“They’re taking advantage of relatively low spreads,” said William Sneed, analyst at Banco Bilbao Vizcaya Argentaria SA in New York. “Appetite for primary market issuance remains strong, and investors are most likely setting aside money in anticipation. The bond should perform well.
Saudi Arabia and Mexico started the year of EM sovereign issuance with big sales on Monday. Last year the kingdom, one of the largest bond issuers in emerging markets, issued $12 billion of bonds to fund its vast economic-transformation plan. Mexico, meanwhile, sold a record $8.5 billion of debt, more than half of its annual hard-currency debt limit.
Chile is selling euro-denominated bonds at a spread of 140 basis points on mid-swap, which is tighter than the initial price negotiated at 175 basis points. The dollar bond deal began with a yield of 105 basis points on US Treasuries, less than the opening price of 137.5 basis points.
Chilean bonds were among the worst performers in emerging markets indexes on Tuesday. They have lagged their peers over the past year and returned about 1%, while notes from developing countries have advanced about 10% over the period.
Concerns about China, Chile’s main trading partner, have broadly weighed on the country’s markets, with the currency falling nearly 11% in the past year and falling to its weakest level since mid-2022 amid a slide in metals. Has reached close to. A weak currency fuels inflation by making imports more expensive, and Chile’s small and open economy is vulnerable because it gets almost all its fuel from abroad.
The country last tapped global debt markets in July, when it sold 1.6 billion euros of social notes maturing in seven years. Earlier, it had issued $1.7 billion of five-year notes in January.
(Updated with details starting in the second paragraph.)
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