Chilean Companies Temper Growth Plans As New Constitution Takes Shape

A roundup of Tuesday’s news from across Latin America

Bloomberg Línea
May 10, 2022 | 11:56 PM

Bloomberg Línea — The process of writing a new constitution in Chile has increased political and economic uncertainties, discouraging corporates’ growth plans, according to a report by Fitch Ratings. The proposed reforms have heightened longer-term risks as they could increase obstacles for developing projects in the country, including obtaining project approvals, weakening property rights, and reducing the availability of local financing due to changes to the pension system. The agency says it does not expect its ratings to be immediately affected, however.

“If the new charter is approved, its implementation will require supporting legislation, which will take time, extending the period of uncertainty. Chilean corporates have tempered their growth strategies to reflect these uncertainties,” the ratings agency says in a note published Tuesday.

On the region’s stock markets, Argentina’s Merval (MERVAL) posted the strongest gains amid opportunity buying, after the index posted its biggest intraday drop since November 2021 on Monday. The Peruvian stock market had the worst performance on Tuesday, closing with a drop of 1.15%, while Brazil’s Ibovespa (IBOV) also closed lower.

Following is a roundup of Tuesday’s news from Bloomberg Línea and Bloomberg reporters across Latin America.

Argentina:

Brazil:

Chile:

  • The ongoing process to write a new constitution in Chile has increased political and economic uncertainties, discouraging corporates’ growth plans, according to a report by Fitch Ratings. The reforms have heightened longer-term risks as they could increase obstacles for developing projects in the country, including obtaining project approvals, weakening property rights, and reduce the availability of local financing due to changes to the pension system. The agency says it does not expect its ratings to be immediately affected, however. “If the new charter is approved, its implementation will require supporting legislation, which will take time, extending the period of uncertainty. Chilean corporates have tempered their growth strategies to reflect these uncertainties,” the agency says. Fitch expects such capex cutbacks to become more apparent in the longer term, due to time-lags in project planning and execution, and which will affect economic growth and employment, putting pressure on many corporates. The draft of the new constitution will be put to a national and obligatory vote in September.

Colombia:

Costa Rica:

Ecuador:

El Salvador:

Honduras:

Mexico:

Peru:

Uruguay:

Venezuela: