Chile’s reputation among foreign investors for its sound fiscal management has survived the recent wave of protests, according to market indicators. The government says it now intends to profit from this credibility.
Chile plans to issue $ 8.7 billion in debt securities next year, of which $ 5.3 billion will be sold abroad, up from $ 3 billion this year. Of these sales of securities on the foreign market, US $ 3.3 billion will be in dollars and euros, and the rest will be denominated in Chilean pesos, but targeted at foreign institutional investors through the pricing process, called bookbuilding.
Social unrest has taken hold in Chile since October 18, which forced the closure of hundreds of stores and delayed investment projects. Still, the government benefits from years of fiscal prudence, which have injected more than $ 15 billion into sovereign wealth funds. Now, the country uses funds to increase pensions, improve health care and create a minimum income, in addition to issuing more bonds abroad.
Chilean bond spreads have increased by an average of five basis points since October 18, only marginally worse than the average of three base points for emerging market sovereign debt.