DBRS on Jan. 27 confirmed its sovereign ratings on Chile, citing the country's sustained commitment to sound macroeconomic policymaking, strong public sector balance sheet and high-quality public institutions.
DBRS confirmed Chile's long-term foreign and local currency issuer ratings at AA (low) and AA, respectively, and the country's short-term foreign and local currency issuer ratings at R-1 (middle) and R-1 (high), respectively.
The trend on all the ratings remains stable.
The rating agency noted that while Chile has seen three decades of robust growth and macroeconomic stability, the economy has slowed over the last three years, partly reflecting a sharp decline in copper prices and weak demand from trading partners.
However, Chile has adjusted well to less favorable conditions, DBRS said, noting that "supportive fiscal and monetary policies have cushioned the copper-price shock and exchange rate flexibility has facilitated an external rebalancing."
The rating agency believes Chile's main credit challenges are medium-term in nature, including diversifying production, boosting productivity, and responding to the rising demands of society in areas such as pensions "in a manner that is financially and politically sustainable."
Chile's central bank lowered its benchmark interest rate by 25 basis points to 3.25% earlier in January, and DBRS anticipates further monetary stimulus in 2017, especially if disinflation trends intensify or economic activity weakens.