EM LATAM CREDIT: Chilean Copper Commission Cochilco Comments on Copper Business

This week brings the US Treasury's quarterly refunding process, split as usual into two announcements: the financing estimates for FYQ3 and FYQ4 out later today (3pm ET), followed Wednesday April 30 by the expected coupon auction sizes for the upcoming 3 months (May/June/July) along with associated materials (8:30am ET). Our refunding preview went out Friday - PDF link here.

• Below are MNI's rough expectations of what Treasury will publish as its financing/borrowing requirements today. (Note the new forecasts also take into account the Fed’s taper of Treasury QT to $5B/month from $25B/month).
• The latest financing estimates will show a large jump in borrowing requirements in the current quarter vs previous forecasts, but these figures are deceptive.
• Treasury assumes at all times that that the debt limit will be resolved and when it makes its projections it doesn't account for the significant undershoot in its cash account. The current quarter started with just under $406B in the Treasury General Account vs the $850B penciled in in February's refunding, meaning the cash raise required to refill the TGA by quarter-end will be a very high $444B. (The TGA is currently close to $600B.)
• The Jul-Sep projections should be taken with similar care, as the expected cash raise will be small or zero, but in reality it could be very large if the debt limit is resolved between July and September and Treasury ramps up bill issuance to refill the TGA.
• Overall we regard risks to our forecasts below as skewed to the following: more negative financing need for Apr-Jun (could be closer to -$100B if Treasury is optimistic on April tax receipts and expects a boost from tariff revenues) leading to a lower marketable borrowing requirement (closer to $400B). We do not have any particular bias to the direction of risks for the Jul-Sep forecasts though if pressed could see borrowing requirements/financing needs as being higher.
• Any lower TGA end-quarter target from the expected $850B would lower the financing need and marketable borrowing requirements by the same amount.

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