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Taxes increase generates bonus in Chile



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In 2018, Chilean corporations made 60 bond issues totaling $ 3.3 trillion, an increase of 19% compared to last year.

Chilean companies are working on every machine to issue new debt before both the Central Bank of Chile and the US Federal Reserve meet expected rates increases in the last month of the year.

The possible new emissions would eventually stamp a "good year" for the placement market in Chile. In 2018, Chilean corporations made 60 bond issues totaling $ 3.3 billion, an increase of 19% compared to the $ 2.8 billion invested in 2017 through 51 operations, of # 39 ; according to data compiled by the Santiago Trade Exchange.

"This year, there has been more reluctance because issuers are hurrying to borrow at still low rates," says Joaquin Aguirre, Manager of Tanner's strategy, adding that 2017 was a year marked by " a strong economic and political uncertainty that stopped to some extent the good dynamism "of the market.

Latam Airlines, Arauco Park and Entel would be among the companies to issue bonds. According to data compiled by Bloomberg Chilean corporations have requested authorization to obtain up to $ 6 billion in the coming months in the debt market.

So far, most of the emissions have been in Units of Public Works, an accounting measure in Chile indexed to inflation. In the last quarter of the year, they made nine corporate bond placements totaling $ 699 billion, almost double the amount issued in the same period of 2017 in the same number of operations, according to data from the Santiago Trade Exchange.

The Central Bank of Chile announced in September that it would begin to withdraw the monetary stimulus as inflation is below the target and given dynamism in the economy. The issuer fulfilled its promise to raise its reference rate to October at 2.75%. However, the market is divided over whether the directory will maintain or increase the rate at the meeting on December 4.

Interest rate swap contracts show that the market bets BCCH will apply at least three additional gains from 25 basis points to 3.5%. For his part, Fed chairman Jerome Powell yesterday fed expectations about a possible break in his monetary adjustment cycle in 2019 after having increased 75 base points this year. The issuer would proceed to a new increase in its meeting on December 19.

With still low rates, investors continue to buy everything that comes to the market. "Investors continue to look for good returns, and we have seen interesting placements and a level of expansion that is well below the historical one," says Nevasa's asset management subordinate, Jorge García.

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