Chile Concerned by U.S. Debt Deadline; No Bond Sale Plans
Chile Concerned by U.S. Debt Deadline; No Bond Sale Plans
During a presentation at AS/COA, Chile’s Minister of Finance Felipe Larraín called a potential default on the U.S. Treasury debt “the gravest concern of the world economy.”
NEW YORK (Reuters) - Chile has no plans to sell sovereign debt in the international markets this year, Finance Minister Felipe Larrain said on Tuesday, citing little need for the cash and the unfavorable rise in benchmark U.S. Treasury yields.
"We really don't need the money, and I don't think we can do better than what we got in 2012," he said.
Larrain was referring to the $750 million, 10-year bond Chile sold in October 2012, which priced with a yield of 2.379 percent, putting it just 55 basis points over benchmark 10-year U.S. Treasuries.
Currently the 10-year U.S. Treasury is trading with a yield of 2.64 percent.
Watch the Reuters interview with Minister of Finance Felipe Larraín here.
"The spread would certainly be above 3 (percent) if we came to the markets right now," he said, noting how the deadline for raising the U.S. debt ceiling and the possible unwinding of U.S. monetary stimulus had raised interest rates globally....
Larrain called the implications of a default on U.S. Treasury debt "unthinkable" and said he hopes reason will prevail.
"It is probably the gravest concern of the world economy," Larrain said after a speech to the Americas Society in New York.
Otherwise he said the global economy could face a situation where the dollar doesn't just fall but plummets and interest rates don't just rise, they skyrocket.
"It could really kill the recovery in the U.S...."
