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The rise in rates causes flu in Chile



By 2018, the Chilean corporations had 60 bond issues for a total of $ 3.3 billion, an increase of 19% over the previous year.

Chilean companies are working full time to issue a new debt before both the central bank of Chile and the US Federal Reserve meet the expected increase in rates in the last month of the year.

Possible new problems would end with a "good year" for the Chilean market. By 2018, the Chilean corporations had a total of 60 bond issues for a total of $ 3.3 billion, an increase of 19% compared to $ 2.8 billion, which was allocated in 2017 by 51 operations on the basis of the data gathered. on the stock exchange in Santiago.

"This year, there was a greater appetite because the issuer dives to borrow at low rates," says Joaquin Aguirre, Tanner's strategy manager, adding that 2017 is a year of "strong economic and political uncertainty, stopped to a certain rate good market dynamics.

Latam Airlines, Parque Arauco and Entel will be among the companies that issue bonds. According to the data compiled by Bloomberg, Chilean corporations have requested permission to raise up to $ 6 billion in the debt markets in the coming months.

Until now, most of the problems have been in the Unidades de Fomento, accounting measures in Chile that indexed inflation. So far in the last quarter of the year, nine corporate bonds were placed for a total of $ 699 billion, almost double the amount issued in the same period in 2017 for the same number of operations, according to Santiago's trade data.

The Chilean central bank announced in September that it would begin withdrawing monetary stimulus because inflation is below the target and given the dynamics in the economy. The issuer fulfilled its promise by raising the reference rate in October to 2.75%. However, the market is divided into whether the board will maintain or increase the rate at its meeting on December 4.

Interest rate swaps indicate that the market is betting that the central bank will use at least three additional increases from 25 basis points to 3.5%. Fed President Jerome Powell yesterday yesterday gave expectations of a possible break in the monetary adjustment cycle in 2019 after raising 75 bps this year. The issuing authority shall accede to the new meeting on 19 December.

With prices still low, investors continue to buy everything that comes on the market. "Investors are still looking for good returns, and we have seen an interesting location and expanding levels well below historic," says Nevers Jorge García's assistant.


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