Uruguay is “one of the most successful economies in Latin America,” according to the chief economist for emerging markets In a recent report for clients accessed by El Pais, that of American broker BCP Securities, Walter Molano.
The broker said in the report that the Central Bank of Uruguay (BCU) reported that the economy expanded 7.7% year-on-year during the second quarter, a figure that was described as “impressive”, according to Molano, who also pointed out that this expansion of GDP (Gross Domestic ProductUruguay was due to a “growing” crop of soybeans, as well as “higher prices” of global commodities that “helped to boost” growth.
However, Molano cautioned that Uruguay’s bonds are “significantly richer than its sovereign spread.”
In this sense, The Economist indicated that BCP Securities estimates Uruguay’s bonds “are about 113 basis points tighter than the credit ratings say they should be.” According to Molano, this is “perhaps a sign that the sovereign is undervalued and may be subject to an upgrade.”
This is not the first time molano Refers to the global economic outlook. Four months ago, in May of this year, The Economist recommended Uruguay instruments to its investors in the local currency, which he said offered “an interesting variety of Treasury notes denominated in pesos that would offer global investors a lower rate of interest”. To provide high rate performance with sovereign credit risk levels.
Similarly, Molano suggested at the time that “inflation-linked” securities “may be the best short-term options.” However, he added that “to normalize the monetary authority (by BCU) policy, investors should switch to fixed rate treasury notes. Investors who prefer liquidity should opt for the BCU bill market, which is huge”. , he had said.