BBVA Note Second Pension Withdrawal Could Prompt ~$12bn Outflows

According to BBVA the second pension withdrawal may prompt up to $12 Billion in outflows:

• Given many accounts are already depleted and the need to withdraw may be slightly lower, maximum withdrawals expected to be lower than in July.
• Further withdrawals in coming months could garner support given popularity.
• Pension funds likely to react with balanced selling of local fixed-income and external assets.
• Central bank has approval to purchase local government bonds if needed, which would prevent a disorderly sell-off.
• They like 10Y TIIE-Camara spread receiver, on upcoming political uncertainty following referendum and potential for more withdrawals.
• While sale of external assets, mostly ETFs and bonds, should be supportive for CLP, some of this may already be priced in.