Chilean Borrowers’ Net Leverage Climbs Back Toward Pandemic Peak
- Restrictive monetary policy has compressed corporate earnings
- Chile’s experience may be a warning to the rest of the world
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A key debt ratio for Chilean businesses is heading back toward its pandemic peak, undoing a sharp recovery in the past two years.
The nation’s corporations slashed their indebtedness in the aftermath of the pandemic, but the ratio of their debt to earnings has surged again. The only time in the past decade that they had more debt compared to earnings was in the second quarter of 2020, right in the middle of one of the world’s stricter pandemic lockdowns.