New increase in country risk.
This Monday, with the local market without activity due to the flag festival, the country is in danger keep going up as a reflection of the price of Argentine bonds abroad.
The JP Morgan indicator that measures the overrate faced by Argentine debt versus US Treasury bills, it increases by 1.3% and reaches 2219 basis points. It is the highest level since August 2, 2020, one month before the debt swap.
Argentine bonds are almost all trading in the red, with declines of around 1%. This Monday It is also a vacation in the United States. therefore the New York Stock Exchange is not listed.
European equity markets remained stable on Monday, with the expectation that tighter monetary policies will come to the world economy. In France, shares fell after President Emmanuel Macron lost control of the National Assembly in Sunday’s elections.
In Argentina, the increase in country risk reflects investor uncertainty in a context of escalating inflation and the government’s difficulties in achieving the objectives set by the agreement with the Monetary Fund.
In this scenario, the country risks It has already been above 2,000 basis points for twelve days. When the debt swap took place in September 2020, it was expected that with the issuance of the new bonds, the indicator would stabilize below 1,000 points.
Although country risk fell rapidly to the 1300 point zone after the trade, it rose again a few days later.
These country risk levels They prevent the government from going out to place debts abroad and it has no alternative but to finance itself on the internal market with placements in pesos, mostly linked to inflation.
The agreement with the Monetary Fund that ended three months ago did not serve to lower the country risk or the future of government bonds. so far this year, the JP Morgan indicator rose 30.8%.
Argentine bonds have lost nearly 30% so far in 2022. Over the past two weeks, the shock has also reached the securities that adapt to CER, that is, from the rate of inflation.
The price of these bonds plummeted 15% and accelerated the exit of institutional investors, who put more pressure on alternative dollars. So, last week, cash with liquidity, the dollar used by companies, jumped to $ 240while the blue dollar hit $ 224, though towards the end of last week it fell back to $ 216.
To stop the bleeding, the Central Bank intervened on the market with the purchase of 150,000 million dollars in securities. While this has served to give CER bonds a floor, at the same time it renews the uncertainty about how long the government will be able to renew these deadlines without changing the rules of the game. Next week, Minister Martín Guzmán will face a $ 500 trillion CER debt maturity.
In parallel, the Central continues without being able to accumulate reserves, which exposes the country to ask for a derogation from the objectives with the IMF and opens expectations of a tightening of the tightening on exchange rates that will further reduce the outflow of dollars.
AQ
Source: Clarin
