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Scotiabank Comment On Yesterday’s Issuance Announcement

CHILE
  • On Tuesday, Hacienda made an announcement that they will issue two sovereign bonds in the local market, for a total amount of USD 3 billion. Analysts have noted that this will include a 15-year UF-denominated bond equivalent to $1 billion and a 10-year CLP-denominated bond equivalent to $2 billion.
  • Scotiabank have noted that with this, the government would have completed the issuance plan for 2023 with USD 15 bn, of which USD 3 bn were in USD-denominated bonds and the remaining USD 12 bn in local currencies (CLP and UF).
  • Scotiabank note that although the 2023 budget law authorized debt issuance of up to USD 17 bn, they believe that this year’s financing needs would be covered with the issuance of USD 15 bn, in line with Ministry of Finance estimates.
  • In any case, the government has dollar assets of close to USD 2 bn in cash, which could help cover the fiscal deficit resulting from lower tax revenues than those projected by the treasury.
  • Scotiabank’s view is that the government would continue to face difficulties in executing the fiscal budget (mainly public investment), while tax revenues could surprise on the downside in 2023. This could deteriorate the effective fiscal deficit of 2.3% of GDP projected by the MoF for 2023.
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