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Thursday, January 7 de 2016

Ministry of Finance announces issuance of Public Debt up to US$8 billion in local market in 2016

  • The Ministry of Finance reports that in 2016, the Republic of Chile will issue Treasury bonds in the local market for an amount of up to US$8 billion, implementing at the same time an exchange program of local securities.

The Ministry of Finance reports that in 2016, the Republic of Chile will issue Treasury bonds in the local market, in Chilean Peso and UF (inflation linked unit), for an amount of up to US$8 billion, approximately. These issues are authorized by the 2016 Chilean Budget Law, subject to administrative requirements, and formalized through a Supreme Decree.

A new strategy of issuance of Local Treasury bonds has also been designed in order to improve liquidity and depth to the Chilean fixed-income market. The new strategy involves selecting only specific bonds as benchmark for the market. With this, the Ministry seeks to achieve a more orderly local curve, with four references in 5, 10, 20 and 30 years approximately, both for nominal and UF curves. Thus, the Treasury will make additional issuance of the “benchmark bonds”, in addition to the US$8,000 million mentioned above, in order to exchange them by other non-benchmark Treasury securities of the current outstanding.

The issuance amounts for each benchmark bond in 2016 are shown below. These amounts do not include the issuance of bonds related to the exchange operation indicated above:

-Peso denominated Bonds with maturity in 2021, up to US$1,400 million (New Issue).

-Peso denominated Bonds with maturity in 2026, up to US$1,400 million (Reopening).

-Peso denominated Bonds with maturity in 2035, up to US$700 million (Reopening).

-Peso denominated Bonds with maturity in 2043, up to US$700 million (Reopening).

-UF denominated Bonds with maturity in 2021, up to US$1,400 million (Reopening).

-UF denominated Bonds with maturity in 2026, up to US$1,400 million (Reopening).

-UF denominated Bonds with maturity in 2035, up to US$700 million (Reopening).

-UF denominated Bonds with maturity in 2044, up to US$700 million (Reopening).

The schedule of placements and exchange operations, including dates and amounts, will be announced once the required legal procedures have been completed.

Both the schedule of placement as well as the exchange program have been designed in coordination with the Central Bank of Chile. However, they may suffer modifications if there is a significant change in market conditions. If this happens, it will be informed promptly. Also, both for the issuance and the exchange program, the Central Bank of Chile will be asked to represent the Treasury in the placement and management of the bonds, acting as fiscal agent. 

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