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JPMorgan on LatAm Debt Market Flows

LATAM
  • * Brazil's last twelve months foreign flows into local debt have now turned negative, while Mexico's Mbono foreign outflows accelerated. Foreigners' positions in Brazilian bonds look much lighter, with 1H22 outflows from NTNFs and LTNs at BRL 75bn. Mbonos had another month of outflows in July, with foreign ownership at 36% and year-to-date outflows of MXN 160bn.
  • * Colombia remains the only country in Latam with continued foreign inflows into local debt, while Chile and Peru have seen little international activity. Nominal TES have seen a record COP 11.5tn of foreign inflows year-to-date, with investors adding risk even during and after the elections. 1H22 foreign outflows from Chilean treasury debt and Peruvian Soberanos are tracking at CLP 620bn and PEN 2.4bn, respectively, with muted activity in recent months.
  • * Foreign inflows into inflation-linked bonds have slowed down across the board. International interest in linkers has been waning in recent months, as an emerging narrative of peaking inflation has gained ground with lower commodities prices and recession talks. Brazil and Mexico had been already seeing smaller inflows recently, while Colombia posted a flat month in July after record inflows. Foreign ownership of linkers remains light at single digits.
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  • * Brazil's last twelve months foreign flows into local debt have now turned negative, while Mexico's Mbono foreign outflows accelerated. Foreigners' positions in Brazilian bonds look much lighter, with 1H22 outflows from NTNFs and LTNs at BRL 75bn. Mbonos had another month of outflows in July, with foreign ownership at 36% and year-to-date outflows of MXN 160bn.
  • * Colombia remains the only country in Latam with continued foreign inflows into local debt, while Chile and Peru have seen little international activity. Nominal TES have seen a record COP 11.5tn of foreign inflows year-to-date, with investors adding risk even during and after the elections. 1H22 foreign outflows from Chilean treasury debt and Peruvian Soberanos are tracking at CLP 620bn and PEN 2.4bn, respectively, with muted activity in recent months.
  • * Foreign inflows into inflation-linked bonds have slowed down across the board. International interest in linkers has been waning in recent months, as an emerging narrative of peaking inflation has gained ground with lower commodities prices and recession talks. Brazil and Mexico had been already seeing smaller inflows recently, while Colombia posted a flat month in July after record inflows. Foreign ownership of linkers remains light at single digits.