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sandensea

(21,526 posts)
Tue Jun 4, 2019, 01:35 AM Jun 2019

Argentina's Macrisis: Country risk surpasses 1000 basis points

A selloff in Argentine bond markets today pushed the nation's 'country risk' to close above 1000 points for the first time in over five years.

The index, based on JP Morgan’s Emerging Markets Bond Index (EMBI) yield for Argentine bonds over the yield of U.S. Treasuries of comparable maturity, reached 1013 points today, an increase of 28 basis points.

The trend has pushed yields on the two most subscribed Argentine bond issues, Bonar 2020 and Bonar 2024, to 19% on the secondary market - the highest in the world for performing sovereign bonds.

The steady increase in the country risk, from around 400 points in early 2018, comes as investors have become increasingly skeptical of Argentina's ability to repay its mounting foreign debts - which now exceed $200 billion in the public sector alone.

Scheduled debt payments over the next four years already total over $148 billion.

Debt service has ballooned from 6% of the federal budget in 2015, to 20% this year, forcing cuts in infrastructure, health, and education budgets amid a deep recession and massive job losses.

Vulture culture

This was Argentina's highest country risk index since February 5, 2014 - at the height of the vulture fund dispute, when holdouts led by Paul Singer's Cayman Islands-based hedge fund NML had a Manhattan court block payment to Argentina's foreign bondholders in order to collect a 1600% payout.

An $8.9 billion payout to holdouts in April 2016 by recently-elected President Mauricio Macri (netting NML an estimated 1180%) was touted as a sign of "Argentina returning to the world."

Macri then issued $122 billion in sovereign bonds and notes over the next two years - second only among emerging markets to South Korea.

Foreign investors lost interest in Argentine bonds in February 2018 however, leading to the implosion that April of a domestic carry-trade debt bubble known as the "financial bicycle."

Shut out of global bond markets, Macri turned to the IMF, where he secured a $56 billion high-access stand-by credit line - the most restrictive kind, and one which only three other crisis-wracked countries (Iraq, Jamaica, and Kenya) currently have.

At: https://translate.google.com/translate?hl=en&tab=wT&sl=auto&tl=en&u=https%3A%2F%2Fwww.ambito.com%2Friesgo-pais-alcanzo-un-nuevo-maximo-la-era-macri-perforo-los-1000-puntos-n5034978



Argentina's Central Bank has responded to investor worries over the payability of the country's mounting public foreign debt by raising its key interest rates to over 70%.

Offering high yields succeeded in stanching capital flight somewhat; but it's also led to effective lending rates of 90% or more for local businesses, further deepening the most severe recession in two decades.
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Argentina's Macrisis: Country risk surpasses 1000 basis points (Original Post) sandensea Jun 2019 OP
Saw this article, and focused on the unbearable thought Macri pretended he was healing Argentina Judi Lynn Jun 2019 #1
And now they owe the IMF so much, they're calling the IMF the 'International Macri Fund' sandensea Jun 2019 #2

Judi Lynn

(160,211 posts)
1. Saw this article, and focused on the unbearable thought Macri pretended he was healing Argentina
Wed Jun 5, 2019, 12:24 AM
Jun 2019

by paying off evil Paul Singer, who had broken every moral code possible.

""Argentina returning to the world."" Good grief! Argentina only had time enough to wave goodbye as Macri started taking the economy down immediately. They dared to pretend Cristina had wrecked it.

The people hated Paul Singer. I saw innumerable political cartoons showing Singer as a vulture, a very homely vulture, always with currency around him. Seeing Macri step in and reward Singer's treachery was a nightmare. Now things are so very much worse.

Totally mind-blowing that adult people would consider living such sleazy lives, having such dirty histories, being so damned dishonest, and expecting people to respect them.

October can't come soon enough. Hoping Mr. Fernández will start getting his ideas across to the people, will be able to remind them how much better the country was functioning prior to Macri, and encouraging everyone to pull together in getting Macri the heck out of office and putting responsible people, people who care, back in charge.

Worst recession in two decades. Incredible. Shame on Macri, and the fascists who put him in power.

sandensea

(21,526 posts)
2. And now they owe the IMF so much, they're calling the IMF the 'International Macri Fund'
Wed Jun 5, 2019, 12:58 AM
Jun 2019

Around 60% of the IMF's global loans outstanding, are currently owed by Argentina.

Not that the IMF's economists supported doing this, to be fair to them.

They've lent them all this money, knowing it can't be repaid (not without a serious restructuring anyway), because Cheeto ordered them to, convinced this would "save" his pal Macri.

And as for the vulture funds payout in 2016 - touted also as "the only way to resolve the dispute for good" - now, three years later, Argentina's being sued again by the second-largest vulture fund, Mark Brodsky's 'Aurelius'.

Aurelius already collected $2 billion in 2016 - but now they want another $80 million for an alleged "shortchanging" from 2013!

The way they see it, I suppose, the only chance they have of cheating Argentina some more, is while Macri's still in office.

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