EM LATAM CREDIT: Telefonica Moviles Chile: WOM Acquisition Interest
(MOVCHI; -/BBneg/BB-neg)
"WOM Mulls Buying Telefonica Unit in Chile, CEO Says: El Mercurio" - Bbg
We posted this headline yesterday morning and while market reaction seems to have been slow as bonds were only quoted .35 higher yesterday, today bonds are up about 4 points.
WOM had third highest market share in the telecom market in Chile, behind Entel and Mexico based America Movil's Claro brand. WOM filed Chapter 11 April 2024, restructured their debt and emerged from bankruptcy March 2025.
Spain based Telefonica is divesting its Latin America operations, excluding Brazil. They have agreed to sell subsidiaries in Colombia, Argentina, Ecuador, Peru and Uruguay. It has reportedly hired JP Morgan to sell its Mexico operations and Citibank to arrange the sale of the Chile operations.
Millicom bought the operations in Ecuador, Uruguay and Colombia as there were synergies but is seen less likely to buy the others.
America Movil expanded its Chile presence last year by buying out JV partner Liberty Latin America’s stake in ClaroVTR, now owning 91% of the entity, and also expressed interest in buying some assets of the bankrupt provider WOM.
MOVCHI recently agreed to a 5-year loan from parent Telefonica of Spain for CLP371bn (USD393mn) to relieve market concerns about liquidity in the wake of the recent bankruptcy filing of Telefonica Peru.
MOVCHI 2031s were last quoted USD64.2, up almost 4 points today but down nearly 10 points QTD and 13 points YTD.
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JGB TECHS: (M5) Rallies off Lows
- RES 3: 147.74 - High Jan 15 and bull trigger (cont)
- RES 2: 146.53 - High Aug 6
- RES 1: 141.48/142.95 - High May 2 / High Apr 7
- PRICE: 139.40 @ 15:42 GMT May 23
- SUP 1: 138.54 - Low May 22
- SUP 2: 136.57 - 1.382 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
- SUP 3: 134.89 - 2.000 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
JGBs have rallied off recent lows and for now, however a bearish theme remains intact following the reversal that started Apr 7. A continuation lower would signal scope for an extension towards 136.57, a Fibonacci projection. On the upside, a reversal higher would instead refocus attention on 142.95, the Apr 7 high. The first important resistance to watch is 141.48, the May 2 high. A break of this level would be viewed as an early bullish signal.
US FISCAL: Total Tariff Income Jumping In May As New Rates Hit
Treasury reported a record $16.5B in customs/excise taxes on May 22, reflecting the large increase in tariff rates that went into effect in April.
- Today's report is important because it represents the largest tariff collections of the month which are typically on a due date around the 22nd, when most corporate importers make their payments.
- Thursday's one-day collection is a record, and the month has already set a new record. Tariff revenues have totaled $22.3B so far in May, and are came in at $17.4B in April (after averaging $8.1B/month in 2024).
- For the fiscal year as a whole so far, customs duties have totaled just under $93B, per the Treasury Daily Statement.
US FISCAL: Extraordinary Measures Continue To Dissipate Alongside Treasury Cash
Treasury's latest estimate of the size of "extraordinary measures" available to use "in order to prevent the United States from defaulting on its obligations as Congress deliberate[s] on increasing the debt limit" is down to $67B on May 21 (of an available $299B), vs $82B a week earlier.
- The amount hit the 2nd lowest level since the debt limit impasse started, at $46B, on May 20 (the low was $34B on Feb 24).
- With $476B in cash in the Treasury General Account on May 21, that left the total resources available to Treasury at $543B, the least since April 14 - the day before the annual April 15 tax deadline.
- Treasury Sec Bessent warned Congress earlier this month that "there is a reasonable probability that the federal government's cash and extraordinary measures will be exhausted in August while Congress is scheduled to be in recess. Therefore, I respectfully urge Congress to increase or suspend the debt limit by mid-July".
