Fitch LatAm Corporate FX Risk: Chile Benefits from Hedging and Derivatives
OREANDA-NEWS. Foreign exchange (FX) risk is manageable in Chile, due to common use of derivatives and natural hedges for exporters, according to the latest report in Fitch's six report series 'LatAm Corporate FX Risk'.
Reports will be released daily through April 22 per the schedule found at the bottom of this release.
'Fitch estimates that seven of a total of 27 corporates would experience at least 0.2x leverage improvement under a 10 percent local currency depreciation. In contrast, there were only three issuers whose net leverage is expected to deteriorate by 0.2x or above in that scenario,' said Rina Jarufe, Senior Director at Fitch.
Depreciation in other regional currencies has affected Chilean corporates. Embotelladora Andina, Latam, Cencosud and Falabella have large operations outside Chile yet maintain part of their financing in USD.
Fitch expects FX volatility to slightly subside in 2016 after sharp depreciations of regional currencies. During 2015, the Brazilian real, Chilean peso, Colombian peso and Peruvian sol devalued by 44 percent, 14 percent, 37 percent and 16 percent, respectively.
The LatAm Corporate FX Risk series will be released as follows:
April 15: Latin America Corporates FX Sensitivity Analysis;
April 18: Brazilian Corporate FX Risk - Prevalence of Natural Hedges and Derivatives;
April 19: Chilean Corporate FX Risk - Depreciation Impact Positively Skewed;
April 20: Colombian Corporate FX Risk - Losers Outweigh Winners;
April 21: Mexican Corporate FX Risk - Highly Exposed to Currency Weakness;
April 22: Peruvian Corporate FX Risk - Portfolio Positioned to Benefit from Currency Depreciation.
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