Chile’s Peso and the Sovereign Rating Decision
Source: http://chileeconomy.blogspot.com/2007/12/chiles-peso-and-sovereign-rating.htmlPosted on Friday, December 21st, 2007 | In Chile, Market Commentary
Chile’s peso gained after Standard & Poor’s Ratings boosted the country’s foreign currency debt rating one step to A+, the highest in South America.
S&P raised Chile’s rating from A as a rally in copper, the country’s biggest export, boosts the government’s budget surplus. Chile has “significantly” strengthened its finances by setting aside more than $10 billion of windfall revenue this year to cover social program and pension costs when copper prices decline, according to the ratings company.
“It highlights their improving macroeconomic fundamentals and debt service capacity over the longer run,” said Cathy Elmore, who helps manage $700 million of emerging-market debt at WestLB Mellon Asset in London. “Bond spreads are already reflecting its quality.”
The peso rose 0.2 percent to 499.55 pesos to the dollar at 4:09 p.m. New York time. The yield on Chile’s 8 percent peso bonds due 2015 climbed 2 basis points to 6.42 percent, according to HSBC Bank USA Chile. A basis point is 0.01 percentage point.
The spread, or extra yield, investors demand to own Chilean bonds was 1.52 percentage points over U.S. Treasuries yesterday, according to JPMorgan Chase & Co. data. By comparison, Brazilian debt yielded 2.13 percentage points more than Treasuries.
The Colombian peso fell 0.3 percent to 2,012.6 per dollar, according to the Colombian foreign-exchange electronic transactions system, known as SET-FX. The yield on Colombia’s benchmark 11 percent peso bonds due 2020 rose 6 basis points to 10.35 percent, according to Colombia’s stock exchange.
Argentina’s peso rose 0.1 percent to 3.1370 per dollar.
Peru’s sol gained 0.1 percent to 2.9755 per dollar. The yield on the country’s 8.6 percent sol-denominated bonds due 2017 was flat at 6.41 percent, according to Banco BBVA Continental Lima.
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Argentina, Cathy Elmore, Chile, Chile, Colombia, JPMorgan Chase & Co., London, Market Commentary, New York, Peru, Peso, South America, Standard Poors, USD
 About Edward Hugh (http://globaleconomydoesmatter.blogspot.com)
Edward Hugh is a macro economist, who specializes in growth and productivity theory, demographic processes and their impact on macro performance, and the underlying dynamics of migration flows. Hugh is a founding member and regular contributor to a number of economics weblogs, including Global Economy Matters, Demography Matters and a number of others. Edward 'the bonobo' Hugh is a Catalan economist of British extraction based in Barcelona. By inclination he is a macro economist, but his obsession with trying to understand the economic impact of demographic changes has often taken him far from home, off and away from the more tranquil and placid pastures of the dismal science, into the bracken and thicket of demography, anthropology, biology, sociology and systems theory. All of which has lead him to ask himself whether Thomas Wolfe was not in fact right when he asserted that the fact of the matter is "you can never go home again". He is currently working on a book with the provisional working title "Population, the Ultimate Non-renewable Resource". Edward also writes regularly for the demography blog Demography Matters. He also contributes to the Indian Economy blog . His personal weblog is Bonobo Land . Edward's website can be found at EdwardHugh.net. Edward follows in detail the Indian, Italian, Spanish, German and Japanese economies. He also has a more than a passing interest in the economies of Turkey and Brazil and in the emerging economies of Eastern Europe. |
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