Argentina: Bonds Fell Again and Country Risk Reaches Four-Week High Amid Currency Pressure

Sovereign bonds once again faced market discontent (though they moderated initial declines) following announcements made by the Minister of Economy on Friday, pushing country risk to early June highs.

Dollar-denominated sovereign bonds resumed their decline, though they tempered their initial losses, after last Friday’s monetary policy announcement which was seen as underwhelming by the market, leading country risk to touch a nearly four-week peak. Meanwhile, ADRs bounced back on Wall Street following Monday’s plunges.

Clearly, the market expected different news on Friday, and the announcements made fell short of expectations, with initial reactions in recent days including the dollar surpassing $1,400 and bonds falling over 1.5% across two days. Yesterday’s meeting with banks wasn’t entirely positive. Several sources indicated that the context and the initiative to transfer debt from the Central Bank to the Treasury did not sit well.

In this scenario, the sovereign bond that saw the most significant decline was the Global 2029, dropping by 3.6%, followed by the Bonar 2038 (-2%) and the Global 2041 (-1.5%). At one point during the session, declines reached up to 5.1%. Consequently, country risk increased by 1.5% to 1,536 points (with an intraday peak of 1,570), marking its highest level since June 7th.

On the other hand, shares of companies listed on Wall Street closed mostly higher, reclaiming some of the ground lost on Monday. Notably, gains were led by YPF (+3.5%), Banco Macro (+3.4%), and BBVA (+2.3%).

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Ignacio Teson
Ignacio Teson
Economist and Financial Analyst
Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.
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