Why Wall Street is so interested in buying deeds in Latin America and what could be the effects | Economy | Notice

Governors and companies, as well as many families, have been involved in making a contribution to the global economic crisis of the last decades.

Some people think the situation is appalling. Pero otros, are approving it is an era of “cheap money” thanks to the low interest rates that exist at the global level and the riots of dollars that fall on all sides.

The goblins – the traverses of the sovereign bonus issue– he was trying to solve the gigantic tax evasion provoked by the pandemic, while some of the mayors operating in the world were seen benefiting from easy money laundering.

In the economic jerga it is possible to “issue debt”, when sales to the markets to obtain financing. And what the great international investors are doing is buying it.

In contrast to rich countries, Latin America is attractive for large-scale inversion funds offer more interests in relation to the rest of the world.

This is the basic reason why the constant flow of private capital is explained by the region in the middle of the crisis. The mayor shares the Welsh provocation of the inversors.

Between buying debt in Latin America and buying debt in United States (like the bonuses of Treasury, for example), is the best deal at the moment for investors buying debt in the region, even the huge sea mayor.

“Debt fever”

Elijah Oliveros-Rosen, Senior Economics Division Latin America Global Economics & Research, S&P Global Ratings Consultant, explains that currently “There is a global debt of debt issue”.

This fever has ten main causes, Oliveros-Rosen dice and dialogue with BBC Mundo.

The first has a relationship with the Estimate tax packages which will implement all the measures to counteract the economic impact of the pandemic.

In emerging countries, this gas is already increasing by 4% of Gross Domestic Product (GDP).

The second reason is that interest rates, mainly in the richest economies, are at its lowest levels in history.

It’s because there are many lands and companies the conveniences endeavor. And it’s a no-brainer to cover a mayor’s guest level. refinancing of deudas anteriores.

Because the prices were not lost in the United States and the governor did not have to issue dollars

“It’s the same thing when you refinance your home mortgage. If it conveys a bag of more interest, it should renegotiate the credit, ”explains the economist.

In 2020 Latin America will issue government and corporate debt bonuses with a close value to them US $ 157,000 million en serana international markets Emre Tiftik, Director of Investigación sobre Sostenibilidad en el Instituto de Finanzas Internacionales de Estados Unidos (IIF, por sus siglas en inglés).

This global figure does not include emissions issued by Argentina and Ecuador in 2020, for its access to international debt markets.

“We have seen a mayor issue of corporate bonuses, even the increase in the issue of sovereign benefits fue opmerklik, launching maximum historical”, the BBC Mice says.

“We are in a better economic environment”

Alberto Ramos, Director of the Latin American Economic Investment Bank of Goldman Sachs, Latin American Economic Investigation, said that economic crime is beginning to turn Latin America into the interests of investors.

“We are in a better economic environment in the region that has its six new months, ”he said.

Another factor that influences Wall Street’s interest in funding the region is its low level of interest. This provokes “a great appetite for buying money in emerging countries”, no solo in Latin America.

“There are billions of dollars with negative taxes” from around the world in a highly liquid environment, explains, algo que beneficia a Latinoamérica.

There are some favorable perspectives on the prices of prime materials and a more debilitating dollar, all the reasons that favor emerging economies and increase the appetite for investing in them.

¿Fugue de capitales?

Governors and companies require financing and for that, the private capital flows the region, is a windfall, experts say. It’s like opening the bank’s gates.

“If Latin American companies can perform well, they are good,” said Ramos.

As the region has many levels of maple and local inversion, it is important to be able to obtain international funding, however.

The mayor risks the real scenario is that suban las tasas interes fuera de la region or the types of change are depreciated. However, the economist explains, there are financial mechanisms to mitigate this type of risk.

The other risk that concerns the experts consulted by BBC Mundo is that a capital balance, it is said that the great inverters are vayan to other lands in search of best returns.

The United States banks that do not want more money from their customers

What tends to happen in order to produce a flight of capital from the region? Basically other markets are more attractive to invest in.

Hecho, the probable approval by the United States of America new package package US $ 1.9 trillion to mitigate the economic consequences of the pandemic has raised the profitability of state-of-the-art bonuses by a wide margin, raising the maximum to one year.

The “rabies” of the markets

The expectation that the tax assessment package in the United States will boost economic growth and generate an increase in inflation has provoked the moment that a new episode of the so-called “taper tantrum” was produced.

What did the taper take? In 2013, a rebate (tantrum, in English) of the markets under the Federal Reserve of the United States (Fed), equivalent to the central bank of these countries, began preparing the ground for a “tapering”, or retreat paulatina de los estímulos.

That is to say, a reduction in its bonus purchase program, which means a reduction in the debt and liquidity purchase ratio that the central bank has driven the economy in the previous years.

The withdrawal of estimates and the possibility of an alza in the cases of interest, provoked a good sale sale which dog its prices and disappoints the profitability.

“These bags are very fast in the United States”, explains Elijah Oliveros-Rosen of the S&P consultant.

“Entities are becoming less attractive to invest in emerging countries and the region’s fugitive.”

Some sons of the 3 countries of Latin America economical cities are experimenting with a mayor “rebate effect” in 2021

The market of markets dissipates volatility and generates a domineering effect. The dollar appreciates the emerging divisions and the debt as the actions of those markets also cayeron.

¿Puede repeats a “taper tantrum? The president of the Fed, Jerome Powell, did not give a signal about an issue in the interest groups, nor did he say anything to change the current expansionary policy in Wall Street. haoi ruido de fondo.

The risk of inflation and the increase in taxes

Investors, market analysts and economists who postulate the theory of a new discount, signal that if inflation increases rapidly, the Fed tends to go backwards and undermine interest rates.

Asia, the return of the bonuses will be lower and lower Latin America is becoming less attractive to investors.

The risk is that a new fugitive from the region’s capital is being produced, which is, in fact, less an option for external funding.

However, it is important to note that more than one external entity, too, can have domestic factors that impulse a flight of capital in a specific country, such as political instability and incoherence.

“At the moment, the most important thing for the region is what is happening with the interest rates a global level ”, according to Oliveros-Rosen.

The risk is that inflation expectations in EE.UU. aumentan, the yield of the good stadiums también va a subir.

But this is very difficult to predict. In this case, Alberto Ramos, who has an important role to play in monetary policy in the United States, at least a couple of years.

Of all modes, say the economist, it is good that at some point the conditions change. Si no lo hacen, means that the economy is closing in on the.

“While the global economy is recovering and the pandemic is over, things are starting to normalize. This is a signal of greetings, no debilitating ”.

The most direct way to anticipate an eventual flight of capital, say the experts, is to stay less and within the possible, horror.

Although economic recovery is not acceptable, it is not easy.