Fynsa
The perception of credit risk for highly rated issuers (AAA and AA) returned to levels similar to those of previous years, given renewed demand for instruments that offer a better return (Corps). Although the market is not yet fully convinced, several unitholders are already looking favorably on them.
Today, we see a market where spreads are around 80-70 bps over the UF curve for long-term bonds (+5y), in issuers of good reputation. These levels not only reflect a more favorable view of risk, but also a local market with greater depth and better conditions to raise financing. This is where we see paper buybacks. To put it simply: the market sees less risk and therefore demands less premium to lend money, in addition to several large companies that have placed bonds again with a very good reception, some even reducing debt. This has restored the confidence of the players, generating a favorable scenario for the issuance of new UF+3% bonds, attractive for funds and more conservative investors.
Currently, corporate bonds (AA) in terms between 6 to 8 years trade between UF+3.10% and UF+3.30%. This means that they earn inflation plus a 3% annual return, something difficult to replicate in short durations, such as time deposits or low duration funds, providing inflation protection and limited risk.
The Central Bank already started its rate cut cycle at its Monetary Policy Meeting in July, leaving it at 4.75, the first rate cut since December 2024. Although they said they would continue to lower the interest rate, at the recent meeting they opted for a rate hold. We believe this is a pause to look at more data, but it does not imply that they will not continue to cut. What does this imply? That longer bonds have a real opportunity to continue rising in price, evidenced in the fundamentals by a tepid market that did not react much.
Victor Valenzuela
Money Desk Operator
