Chile wins Euroclear access for corporate bond market
Chile has sealed a long-awaited deal with Europe's biggest securities settlement house Euroclear to include the country's corporate bonds on the firm's international investor platform.
Chile's government bonds gained so-called 'Euroclearability'
back in 2017, but adding its $20-$25 billion domestic corporate bond market had
been held up by changes of governments and technical issues such as tax
treatment.
Settlement forms the crucial, underlying plumbing of
financial markets and in emerging economies especially Euroclear's system can
be a key way to attract big-money pension funds and sovereign wealth funds.
"We would like corporates to have access to this wider
pool of international liquidity," the Chilean finance ministry's
coordinator for international finance, Andrés Pérez, told Reuters as he
confirmed the agreement.
"These are all pieces geared towards integrating the
Chilean market into the rest of the world."
The move could give a timely lift to Chile's markets. Banks
and multi-nationals have been facing widespread uncertainty since three
quarters of Chileans voted in favour of rewriting the country's constitution
last October.
It was drafted during Augusto Pinochet's 1973-1990 military
dictatorship and has been credited with underpinning Chile´s free market model
but also driving widespread inequality. Crafting a new one will start this
weekend but could take up to a year.
Pérez said the timing of Friday's announcement was a
coincidence and had been something previous governments had also been working
towards.
Euroclear's Global Head of Capital Markets and Funds
Services Stephan Pouyat said mid-sized emerging markets are now strategic to
its expansion plans, with others likely to follow.
"This creates hope for a lot of countries that see
Chile as a comparable market," Pouyat said, adding "a good
handful" were in discussions at present.
Perez and Pouyat's deputy Frank Slagmolen both highlighted
how Euroclearability has boosted foreign buying in the government bond market
and lifted its weight in influential indexes that act as a shopping list for
heavyweight international funds.
This week the government sold a 1.5 trillion Chilean peso
denominated ($2 billion) 'social bond' where nearly half the buyers were from
outside Chile.
"When you have euroclearability it is a self fulfilling
prophecy," Slagmolen said. "The market will grow."
Comments
Post a Comment