Chile's Ministry of Finance announced an updated bond placement program totaling $23.6 billion for 2026, an increase from the initial $17.4 billion. This follows Congressional approval for an additional $6.2 billion in borrowing. Of the new total, $9.6 billion is allocated to the international market, with approximately $4.4 billion already issued in January, leaving roughly $5.2 billion for subsequent international placements. The remaining $14.0 billion (60% of the total) will target the domestic market, focusing on short and medium-term Treasury Bills with a 2027 maturity, estimated at $6.0 billion, and about $2.0 billion in placements during the last quarter.
The government's decision to seek additional debt comes after a revised fiscal forecast indicating an overestimation of revenues and an underestimation of expenditures, leading to a projected deficit of 2.4% of GDP, higher than the 1.5% stipulated in the initial budget. Finance Minister Jorge Quiroz explained that the additional $6.2 billion includes addressing a $4.7 billion financing gap and an extra $1.5 billion to regularize unavoidable state payment obligations, including unpaid suppliers.
Despite concerns that the extra borrowing could jeopardize Chile's reputation for fiscal prudence, market conditions are currently favorable. The spread on Chilean dollar bonds over U.S. Treasuries recently dropped to 82 basis points, near two-decade lows, indicating robust investor demand. Analysts like William Snead from BBVA noted that investors likely reserved room for new primary market debt, making a new issuance unsurprising. Chile maintains strong credit ratings, with an "A" from S&P Global Ratings and "A-" from Fitch Ratings, the best in Latin America.
