EM LATAM CREDIT: Fitch Ratings Affirmation: Republic of Chile (CHILE; A2/A/A-)
Feb-12 20:20
"Chile Still Faces Fiscal Challenges, But Pension Reform Appears Neutral" - Fitch Ratings
Neutral for spreads
- Chile issued a 12-year Jan.7, 2025 at T+ 105bps, now quoted T+107. A 2036 issue has traded in a range of T+90-103 last at T+100bps. The trend in this high-quality issuer has been very stable. Overall, Chile’s latest fiscal deficit projection for 2025 was in line with Fitch’s estimates and the credit profile of the sovereign remained unchanged so we don’t see an impact on spreads.
- Fitch cites government estimates of the cost of the pension reform will rise to 1% of GDP by 2032, offset to some extent by revenue increases from a tax evasion bill.
- The rating agency also cites a positive benefit from the pension reform from a larger, deeper local bond market that will enable the sovereign to issue more local debt as a percentage of the total and therefore be less exposed to FX swings and less reliant on foreign investors.
https://www.fitchratings.com/research/sovereigns/chile-still-faces-fiscal-challenges-but-pension-reform-appears-neutral-12-02-2025#:~:text=The%20reforms%20will%20see%20the,foster%20competition%20in%20the%20industry.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
US TSYS: Late SOFR/Treasury Option Roundup
Jan-13 20:18
Heavy SOFR & Treasury options reported Monday, call volume gaining in the second half as underlying futures drifted off midday lows. Focus on this week's PPI and CPI inflation measures (Wed & Thu respectively). Projected rate cuts through mid-2025 continue to retreat, current vs. late Friday levels* as follows: Jan'25 steady at -0.7bp, Mar'25 -4.9bp (-6.3bp), May'25 -8.4bp (-10.5bp), Jun'25 -16.3bp (-18.2bp), Jul'25 -18.7bp (20.2bp).
- SOFR Options:
- +10,000 SFRH5 95.68/95.75/95.81/95.87 call condors, .75 vs. 95.74/0.12%
- Block, 10,000 0QH5 96.00/96.12/96.25 call trees, 3.5 net (2-legs over)
- -8,000 SFRM5 95.62/95.75 put spds, 6.25 ref 95.815
- -5,000 SFRU5 95.87/96.06 call spds vs 95.25 put, 0-.25 ref 95.86
- 25,000 0QH5 96.06/96.31 1x2 call spds, .25 ref 95.85
- +5,000 SFRN5 96.00/96.37 call spds, 8.5 vs. 95.865/0.18%
- +5,000 0QM5 96.25/96.37 call spds 1.0 over SFRM5 96.06/96.18 call spd
- +10,000 0QH5 96.00/96.25/96.81 1x1x2 call trees, +3.25 net ref 95.865
- +5,000 SFRZ5 95.50/96.00/96.50 call flys, 10.75 ref 95.885
- 5,000 SFRJ5 95.50/95.56 put spds ref 95.83
- +10,000 SFRM5 95.56/96.12 strangle, 12.00 ref 95.83
- -10,000 SFRU5 95.37/95.56 put spds vs 5,000 SFRM5 95.62/95.87 put spds, 5.75-6
- -15,000 SFRU5 95.18/95.43 put spds v SFRZ5 95.87/96.06 put spds, 7.5-7.25
- -4,000 SFRZ5 95.18 puts 0.5 over 96.12/96.62 call spds vs 95.88/0.38%
- +4,000 SFRZ5 95.25 puts, 13.5 vs. 95.88/0.25%
- 8,800 0QN5 96.62/96.68 call spds ref 95.835
- 3,750 SFRG5 95.68/95.75 put spds ref 95.735
- 5,000 SFRG5/SFRH5 95.87/96.06 call spd spds
- 3,500 2QJ5 96.25/96.87 call spds ref 95.74
- over 26,000 SFRU5 95.87/96.06 call spds vs. 95.25 puts ref 95.835
- 2,000 SFRU5 96.50/97.00 call spds ref 95.835
- +10,000 SFRU5 95.50/95.62 put spds, 3.5 ref 95.835 to -.85
- 1,500 0QJ5/3QJ5 95.25 put spds
- Block, 4,100 SFRU5 96.12 puts, 45.5 ref 95.85
- Block, 3,156 0QU5 96.12 puts, 58.0 ref 95.80
- 5,200 0QG5 95.87/96.12/96.25 broken put trees ref 95.845
- 3,000 SFRM5 95.75 puts ref 95.82
- 2,000 SFRM5 96.12/96.37 call spds ref 95.825
- Treasury Options:
- +60,000 TYG5 116.75 calls, cab 7
- 4,500 TYG5 107.5/TYH5 105 put spds, 17
- 5,000 TYG5 106.5/TYH5 107.5 put spds, 51 net/March over
- 2,500 FVH5 105.5/105.75/106/106.25 call condors
- over 6,300 TYG5 108.5 calls, 6 last
- 2,000 TYH5 106 puts, 28 last
- 3,000 TYH5 106/107 put spds ref 107-08.5
- 1,500 TYG5 107.5/109 put spds, 114 ref 107-08.5
- over 4,700 FVH5 104.5 puts, 17 last
- 4,600 FVG5 105.5 puts, 24.5 last
- 4,400 FVH5 105 puts, 28 ref 105-11
- 3,500 FVZH5 101.75 puts ref 105-14
EURGBP TECHS: Maintains A Firmer Tone
Jan-13 20:15
- RES 4: 0.8494 High Aug 26 ‘24
- RES 3: 0.8471 61.8% retracement of the Aug 8 - Dec 19 downleg
- RES 2: 0.8448 High Oct 31 and reversal trigger
- RES 1: 0.8424 50.0% retracement of the Aug 8 - Dec 19 downleg
- PRICE: 0.8390 @ 20:01 GMT Jan 13
- SUP 1: 0.8318/8284 50-day EMA / Low Jan 8
- SUP 2: 0.8263 Low Dec 31
- SUP 3: 0.8223 Low Dec 19
- SUP 4: 0.8203 Low Mar 7 2022 and a major support
EURGBP traded sharply higher last week and remains firm. The cross has breached resistance at the 50-day EMA, and cleared the December highs. This undermines the recent bearish theme and suggests scope for a stronger short-term recovery. Note too that 0.8376, the Nov 19 high and a key resistance, has also been cleared. Sights are on 0.8424, a Fibonacci retracement and the Jan 13 high. Support at the 50-day EMA is at 0.8318.
US STOCKS: Late Equity Roundup: Paring Losses, Oil & Gas Leading
Jan-13 20:03
- Stocks are still trading mixed but climbing off lows amid chatter of an impending Israeli ceasefire/hostage deal tomorrow that lent to late Monday risk-on tone. Narrow ranges persisted as focus remains on this week's PPI and CPI inflation measures on Tuesday and Wednesday respectively, as well corporate earnings that kick off this week.
- Currently, the DJIA trades up 267.83 points (0.64%) at 42205.15, S&P E-Minis down 3.25 points (-0.06%) at 5862.5, Nasdaq down 137.1 points (-0.7%) at 19022.49.
- Energy and Materials sectors continued to outperform in the second half, support for the former tied to gains in crude (WTI +2.40 at 78.97): Valero Energy +5.29%, Marathon Petroleum +3.56%, APA Corp +3.25%. Materials led by Mosaic +7.49%, CF Industries +7.37%, Steel Dynamics +6.22% while Albemarle gained 4.99%.
- Utility and Information Technology sectors continued to underperform, electricity providers weighed on the former: Edison International down nearly 12% amid investigations into whether electrical equipment operated by SoCal Edison sparked a blaze in Hurst. Elsewhere, Constellation Energy declined 6.15% despite several agency upgrades, PG&E -4.19% and AES Corp -3.33%.
- IT sector shares remained under pressure as the Biden administration looked to curb semiconductor exports to China: Super Micro Computer -4.79%, Micron -4.17%, Palantir -4.25, Nvidia -2.53%.
- Reminder, the next round of quarterly earnings kicks off this week with Blackrock, Bank of NY Melon, Wells Fargo, JP Morgan, Goldman Sachs, Citigroup, US Bancorp, M&T Bank and PNC all reporting between January 15-16.
