Survey Signals Rising Risk Appetite
Chilean fixed-income recommendations for September show a meaningful shift toward lower-rated corporate issuers. Seventeen percent of respondents said they would buy securities rated as low as BBB - over three times the previous month and the most since March. Roughly 30% would stay in the safest bucket, 26% would focus on AA or above, and a further 26% would be comfortable going down to A. Preferences were evenly split between corporate and Treasury bonds, with just 8% advising no exposure to local fixed income.
Policy Momentum and Early Business Responses
The centerpiece of the administration's omnibus economic package - cutting corporate taxes and simplifying procedures - cleared Congress in July and will take effect in the first half of September, according to Finance Minister Jorge Quiroz. The budget office expects the legislation, alongside separate measures to speed up investment permits, to bolster activity and lift GDP by 3.7% in 2027, per its latest quarterly public finances report. Jaime Achondo, general manager at Fynsa, said, "Following the approval of the bill, there is a sense that growth will rebound strongly after years of widespread, intense uncertainty." He added, "Spreads are already quite tight. So, amid improved sentiment, the market tends to seek more risk, backing companies that had been shut out of the market for years." Achondo also said new projects could start to appear as early as the first half of 2027.
Business indicators are starting to firm up. From January through July, 140,412 new companies were registered - the highest tally for that span since the series started in 2013, according to the Economy Ministry. Beginning in March, the month President José Antonio Kast assumed office, the environmental evaluation agency has approved projects worth almost $18 billion. Ariel Nachari, a strategist at SURA Investments, noted that confidence in institutions and the regulatory framework has strengthened under Kast. "This favors investment in lower-rated issuers, such as those with a 'BBB' rating," he said.
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Risks Temper the Outlook
Growth remains fragile: output stagnated in the second quarter after a 0.3% contraction in the first three months, narrowly avoiding recession. The legislation is projected to drag on government revenue for a minimum of five years, nudging gross debt toward about 45% of GDP - a threshold some analysts warn could risk a sovereign downgrade. Many analysts also warn that, after months of soft readings, the administration's growth forecast could be overly optimistic.
External risks are compounding. At the six-month mark of the war in Iran, the drawn-out fighting has raised worries about a steeper global downturn. The US has indicated it does not intend to remove its naval blockade or restore the June ceasefire terms, which has helped keep oil prices high and inflation risks alive. Achondo said those concerns should recede once investment projects begin to materialize.
What Investors Are Buying
"The reform should have a significant impact on investment," stated Milenko Mitrovic, the chief investment officer at Octogone. "This change won't happen overnight, but it should provide a boost to growth." The survey found recommendations split evenly between corporate and Treasury bonds. Nachari said, "Today, they offer an attractive overall yield in a macroeconomic environment that is expected to improve over the coming quarters, supporting greater risk-taking," adding, "Corporate spreads will remain under downward pressure."
