US Swaps Bets Backfire, Wiping Out Billions From Funds in Chile
8 Articles
8 Articles
US Swaps Bets Backfire, Wiping Out Billions From Funds in Chile
The pension funds used by millions of Chileans are racing to close out bets on US interest rates that backfired after the Iran war unleashed a global inflation shock, exposing them to billions of dollars of losses.
Chilean pension funds, including the lowest-risk E fund, have experienced significant losses and an increase in their exposure to risk. A Bloomberg report details how pension fund managers (AFPs) are closing positions in interest rate derivatives in the United States, which has resulted in [...]
Chilean pension funds face losses of US$7.7 billion in positions linked to US interest rates, after an investment strategy that sought to benefit from future rate reductions was adversely affected by the change in market conditions. Bloomberg reported, based on figures [...] Chilean AFP entry faces losses of US$7.7 billion in US interest rate bets was first published in El Periodista.
The news site Here and Now reports on Wednesday that Chilean AFPs face valuation losses of about $7.7 billion in derivatives positions linked to U.S. interest rates, after the change in market conditions hit a strategy that had initially generated significant profits. According to [...]
The September portfolio, recently published by the regulator, reveals the cost of the bet: of the 7.4% nominal that falls the most conservative fund in 2026 (more than 10% real), 5.9 points come from interest rate swaps. Dollar forwards subtracted another 0.8 points from fund E.
Regulatory changes and rising fees in the U.S. plummeted the value of Chilean pension funds' investments, forcing the cancellation of billionaire derivatives on Wall Street.
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