Why are Chilean bonds the most sought after by Argentine investors?


The Fed and a favorable context for emerging economies favors the compression of spreads, also benefiting our bonds, becoming a shed for those who run the risk of the neighboring country.

One of the investment strategies of the Argentineans in 2019 is to invest in assets that are not related to local risk through the positioning of funds that invest 75% in Mercosur Chile assets.

Thanks to your good credit ratingThe Chilean chains are the ones that have more attention. While local money demand has helped to see a good evolution of these roles, global causes benefited from emerging Chilean fixed income.

The bonds of countries in the area are in a good cycle. In general, compression processes of Chilean, Brazilian and Mexican alliances spread from the order of 60 to 90 essential points are seen.

In this line, Chilean bonds are the most sought after by Argentine fund portfolio managers, Pushing the irons from the chains down. Chile 2020 bond yields 2.27%, 2021 yields 2.37% and 2.55% in 2022.

Juan Salerno, Portfolio Manager Head of Campus Group, explains that while Chilean's demand for chains is favored by local investors in part for its spreads, there are two more topics that have contributed to compression, such as the scenario in which It is expected that the Fed will not raise rates and the papers' low liquidity.

"The Fed's most cautious policy of rate hikes has generated a strong rally in all emerging debt, especially with the highest credit risk (as a benchmark, the Latin American investment index investment has seen an increase in the top year). "The universe of Chilean bonds is relatively limited and with moderate to low liquidity, given that there is a market that is generally expensive by institutional investors," Salerno added.

Investment in international funds

Although the Latin American fixed income in general and Chilean in particular showed a good performance so far this year, the key is to determine if it still represents a good investment opportunity Looking forward to the next months that Argentina will face electoral issues.

One of the tools to escape the local risk is to invest in the fund.

To explain this tool a little, ICBC Investments Argentina's portfolio manager Marceo Otermin added that for this type of money, it is important to emphasize that the Argentine regulation requires at least 75% investment in assets of Argentina or Mercosur or Chile.

"Given the regulation, the only way out of local risk is to invest in Chilean or Brazilian bonds. We collect Chile since the management regulation states that there must be investment grade bonds. For its part, the remaining 25%, we have decided to invest in the US. There. Bonds. And Mexico, "he said.

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