Volatility Storm Adds to Pain for Chile’s Battered Markets (Bloomberg via Yahoo)

• The last few months of white-knuckle trading in Chilean assets, on a par with the most unstable of its emerging-market peers, is erasing the final traces of the country’s reputation as the most stable of Latin America.
• Mario Castro, a fixed income strategist at Banco Bilbao Vizcaya Argentaria SA in New York: “There has been a structural change in Chile, which involves an institutional deterioration and a shift toward a welfare state that will push up fiscal pressure.”
• Back in 2017, Chile was rated AA- at S&P Global Inc., on a par with market favorites such as Taiwan and the Czech Republic. Then a mounting fiscal deficit led to a downgrade to A+ that year, followed by another cut to A in 2020.Now, even that rating seems to flatter Chile, with its dollar debt trading at yields similar to those of countries with a BBB rating such as the Philippines, and far above similarly rated Saudi Arabia, according to data compiled by Bloomberg.
• What really shook Chile and markets out of their 30-year slumber was the riots of October 2019 that brought the army back on the streets and saw the then president almost besieged in the Moneda palace. Nothing has been the same since. READ MORE

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