EM LATAM CREDIT: Chile's Codelco Moody’s Credit Rating Downgrade: Neutral take
Codelco (CDEL; Baa2 /BBB+ /BBB+)
• Chile government owned Codelco, largest copper producer in the world, had their Moody’s credit rating lowered to Baa2 due to persistently high leverage that was not expected to improve and a higher cost structure than peers.
• Baseline credit assessment was lowered to Ba3 from Ba2 as the rating agency cited expected debt leverage of 5x due to high capex needs over the foreseeable future combined with concerns about lower Chinese demand and the overall global economic outlook.
• Ba3 underlying assessment gets bumped up to a Baa2 rating thanks to Chile (CHILE; A2 /A /A-) government expected implicit support if needed.
• Moody’s had Codelco ratings on negative outlook for almost two years. When they last downgraded the company in October 2023 to Baa1 they left the ratings on negative outlook.
• CDEL issued 10-year notes January 2025 at T+165, last quoted T+149 which was 19bps tighter QTD. Spread to the sovereign was last quoted 70bps apart and has ranged between 54bps and 94bps over the past year. We don’t see any market impact from the downgrade.
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LOOK AHEAD: Eurozone Timeline of Key Events (Times BST)
| Date | Time | Country | Event |
| 25-Apr | 0745 | FR | Manufacturing Sentiment |
| 29-Apr | 0700 | DE | GFK Consumer Climate |
| 29-Apr | 0800 | ES | HICP (p) / GDP |
| 29-Apr | 0900 | EU | M3 / Consumer Expectations Survey |
| 29-Apr | 0900 | IT | ISTAT Confidence Indices |
| 29-Apr | 1000 | EU | Consumer Confidence, Industrial Sentiment |
| 30-Apr | 0630 | FR | GDP (p) / Consumer Spending |
| 30-Apr | 0700 | DE | Import/Export Prices / Retail Sales |
| 30-Apr | 0745 | FR | HICP (p) / PPI |
| 30-Apr | 0855 | DE | Unemployment |
| 30-Apr | 0900 | DE | GDP (p) / State level CPI |
| 30-Apr | 0900 | IT | GDP (p) |
| 30-Apr | 1000 | EU | GDP preliminary flash est. |
| 30-Apr | 1000 | IT | HICP (p) |
| 30-Apr | 1100 | IT | PPI |
| 30-Apr | 1300 | DE | HICP (p) |
JGBS: Twist-Steepener Holds Going Into W/E, BoJ Gov Ueda Reiterates Caution
JGB futures are stronger, +18 compared to settlement levels, sitting near the middle of the range after a choppy session.
- “Governor Kazuo Ueda reiterates his stance that the central bank will carefully monitor if its economic outlook will be realized, accounting for the effects of US tariff measures, without preconception. The BoJ will raise the benchmark rate if the outlook is realized, Ueda says in response to questions in parliament.” (per BBG)
- “Fukoku Mutual Life Insurance Co. plans to invest in Japan's super-long government bonds this fiscal year after their yields skyrocketed. The company aims to increase domestic government bond holdings by ¥30 billion, with gross purchases potentially reaching ¥300-400 billion.” (per BBG)
- Earlier today, Headline CPI for March showed +3.6% y/y versus +3.7% estimate. Core and Core-Core printed +3.2% y/y and +2.9% y/y, respectively, versus estimates of +3.2% and +2.9% and priors +3.0% and +2.6%.
- Cash US tsys are closed today for the Good Friday holiday.
- Cash JGBs have twist-steepened, pivoting at the 20-year, with yields 2bps lower to 5bps higher.
- Swap rates are 2bps lower to 2bps higher, with a steepening bias.
- On Monday, the local calendar will see Tokyo Condominiums for Sale data.
