Argentine bonds succumb to global bond market turmoil as Macri euphoria cast aside.
Argentina managed to sidestep an emerging-market bond rout late last year on optimism that newly elected President Mauricio Macri would end the nation’s financial isolation. But now, the deepening selloff roiling global markets is proving to be too much for investors to ignore.
The country’s dollar-denominated notes have lost 3.9% this month - more than three times the average in emerging markets, data compiled by JPMorgan Chase & Co. show. Argentina's benchmark bonds due in 2033 have slid 4.1% from a nine-year high of 115 cents on the dollar reached December 30 and are now trading at 110 cents. The same bonds had risen over 20%, to an above-par price of 112 cents on the dollar, during former President Cristina Fernández de Kirchner's last year in office.
While Macri has followed through on promises to dismantle currency controls and start negotiations with disgruntled holdout bondholders since taking office last month, the turmoil in global markets fueled by plunging commodity prices upended a plan to sell local notes and fueled the decline in overseas notes as investors dumped risky assets. Argentina’s foreign debt is rated Caa2 by Moody’s Investors Service, eight levels below investment grade. Standard & Poor’s has a SD, or selective default, grade on the debt since Judge Thomas Griesa blocked payments for most of Argentina's bondholders at the behest of minority vulture fund investors in 2014.
“There’s been a strong risk-off in emerging markets, and even if Argentina has been separate from other global trends, it’s not immune,” said Joaquin Almeyra, a fixed-income trader at Bulltick LLC. “You’ve seen a lot of pain across Latin America and this was a question of contagion.”
At: http://www.bloomberg.com/news/articles/2016-01-26/argentina-succumbs-to-bond-turmoil-as-macri-euphoria-cast-aside
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President Truman famously noted that "if you want to live like a Republican, you have to vote for a Democrat." The same is true in Argentina: the more "pro-business" they are, the worse they usually are for business (not to mention people).
