Argentine Stocks and Bonds Plunge Up to 10%, Country Risk Surpasses 1,500 Points Following Government Announcements

Following the announcement by the Economy Minister, Luis Caputo, on Friday, the government only hinted at a swap of Central Bank (BCRA) bonds for Treasury bonds for banks.

On this turbulent day, Economy Minister Luis Caputo met with bankers and reaffirmed the direction of his policy. It was revealed that the head of the Treasury assured them that the peso will not disappear and that it “will be a strong currency” as a result of the new zero-emission policy phase aimed at achieving currency competition.

Argentine assets plummeted up to 10% on Monday, July 1, both on Wall Street and the Buenos Aires Stock Exchange. The announcement by Minister Luis Caputo and Central Bank President Santiago Bausili on Friday failed to meet market expectations. Dollar-denominated bonds fell by up to 4.8%, ADRs by up to 9.6%, and country risk surpassed 1,500 basis points.

In this context, the most affected dollar bonds were the Bonar 2041 (-4.8%), Global 2046 (-4.1%), and Global 2029 (-3.6%). Due to these declines, the country risk, measured by JP Morgan, rose 50 points (+3.4%) to 1,506 basis points.

Argentine stocks trading abroad sank by up to 9.6%, led by banking shares. The steepest declines were in Supervielle (-9.6%), Grupo Financiero Galicia (-9.5%), Edenor (-8.7%), and Banco Macro (-7.6%).

In the local market, the S&P Merval index fell by 1% to 1,594,732.83 units, after closing June with a 2.4% loss.

The day’s declines were driven by banking stocks: Grupo Supervielle (-6.5%), Banco Macro (-5.5%), Banco BBVA (-4.8%), and Banco Galicia (-4.4%).