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Pesos beat dollars, says Parque Arauco 0

Jul 23, 2014

Parque Arauco has put aside intentions to sell a bond internationally for the moment, given less favorable conditions, and will look at the local market to raise debt, LatinFinance has heard. 

A worsening in the swap rate makes a issuing a dollar-denominated bond less attractive than earlier in the year, when Parque Arauco told LatinFinance it was considering such a move. Between base rates, spreads and swaps, it makes more sense to issue locally in Chile, the company told LatinFinance

Most of the revenue for Parque Arauco, which develops and operates shopping malls, is in local currency in Chile, Peru and Colombia, Juan Antonio Álvarez, the company’s chief executive, said: "Either with swaps or issuing in local currency, we want at least most of the debt to be hedged with our revenue," Álvarez told LatinFinance
   Source: dbravosilva  

The Chilean firm is considering issuing a bond in the local market within the next 12 months to finance expansion in Chile, Peru and Colombia in the coming years: "We want to combine an aggressive and ambitious growth strategy with a sound and conservative financial strategy," he says. 

He points in particular to Peru, which the firm entered in 2006, and to Colombia, which it entered in 2008. "The markets in these countries are growing fast, and are still underpenetrated compared to developed markets," he says. 

Meanwhile, Parque Arauco expects to use $200m-equivalent from a capital increase in the first quarter of this year to continue expanding. The company issued 127.8m shares, selling 115m, with the rest set aside for stock options. 

Some 28% of Parque Arauco is held by foreign investors, a figure that Álvarez says has increased in recent years. Meanwhile, Chilean pension funds also nearly doubled their participation in the firm from 4% to just over 8% of the firm's total stock over the last year, according to Álvarez. 

"We are the only possible vehicle for foreign investors to invest in commercial real estate in the Andean region," he said. "We are, we believe, a very attractive company. We show quite good performance consistently, and we expect to continue doing so."

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