MercoPress. South Atlantic News Agency

Volatility hits regional sovereign bonds risk assessment

Regional sovereing bonds losse ground

Chile's country risk assessment shot this week to its highest level since August 2003 but is still the lowest in Latinamerica. International volatility with investors selling stocks and higher risk bonds and moving into more stable US bonds is seen as the cause behind the events of last week.

Chile's risk, the difference in spread between US Treasury bonds and Chilean sovereign bonds ended last week at 115 points, 27 points higher than the previous Wednesday and 31 higher than the end of 2006. According to JP Morgan investment bank which elaborates the risk index, the Chilean 2009 bond climbed 16.65 points; the 2012 issue was 8.45 up to 71.79 and 2013 bonds, 8.02 to 73.32. Meanwhile in the rest of Latinamerica the tendency was similar: Mexican country risk climbed 27 points to 222; Peru, 24 points to a base of 173; Colombia, up 37 points to 190; Uruguay, up 19 points to 198; Brazil 39 points to 222; Venezuela climbed 55 points to 386; Argentina 67 points up to 468 and Ecuador, 51 points with a base of 779 points. In Argentina last week's volatility cost the Central Bank an estimated 150 million US dollars to help bring down the US dollar which had jumped from 3.09 to 3.20 pesos. On Friday the bank had managed to stabilize the US dollar at 3.13 pesos. Even when 150 million US dollars is an insignificant sum compared to Argentina's international reserves that stand at 44.235 billion US dollars, it was the first time in a couple of years that the Central Bank lost reserves. Actually Argentina's problem has been how to absorb liquidity from the massive influx of foreign currency from overseas investments and booming commodities' exports.