Moody's may upgrade Chile

Moody's Investors Service said it placed Chile's foreign-currency credit ratings on review for possible upgrade in light of indications of possibly diminished credit risks associated with private-sector external borrowings, evidence that the current economic policy framework has reinforced Chile's already strong credit fundamentals, and significantly improved external debt indicators as confirmed by a reduction in both the foreign currency debt-to-exports ratio as well the foreign currency debt service ratio.

The ratings affected include Chile's Baa1 foreign-currency country ceiling for bonds and notes, the Baa1 foreign-currency country ceiling for deposits and the Baa1 foreign-currency rating for bonds and notes. The review will not extend to the government's local-currency rating, which is expected to remain at A1.

Moody's said the review will place special attention on the behavior of private-sector borrowers, which account for nearly 80% of Chile's total external debt, and the degree to which private-sector borrowers have been able to reduce their credit risk exposure to exchange rate fluctuations by hedging foreign-currency denominated liabilities.

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