The economist from JPMorgan Diego Pereira said that Guzmán’s resignation on Saturday “opened a new regime of financial and macroeconomic uncertainty,” with the balance of power now firmly tilted in favor of “Kirchnerists” loyal to the vice president.
Bondholders, meanwhile, said renewed attempts to increase government spending now would add to the country’s problems ahead of presidential elections late next year.
“The market was already very fragile and now it is going to be terrified“said Riccardo Grassi, head of risk management at the Mangart investment fund, which was involved in the Guzman-led debt restructuring in 2020. “If they don’t review the (economic) model, it’s going to implode,” he added.
The Argentine peso is now trading at a nearly 50% discount on the black market and its bonds are worth about half what they were worth after the country’s 2020 debt restructuring of more than $100 billion. They have been trading at deeply discounted levels of between 20 and 25 cents on the dollar in recent weeks, but most bondholders are now clinging to the hope that a change in government next year could change the approach of the country.
“If you have a bonus, I think that’s why you have it,” he said. Carlos deSousa, of the European fund Vontobel, which also has some bonds from Argentina, referring to the expected change of government next year.
“Let’s see what the new economy minister, who is not well known, is going to do,” he added. “And we are going to see how the negotiation with the Paris Club goes now because that was a job that Guzmán did not finish,” she added.
Source: Ambito
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