Despite being at its lowest level since 2019, the risk of Argentine debt continues to be among the five highest in Latin America. El Salvador is the closest country to overcome.
The country risk broke 1,000 basis points this Friday for the first time since 2019falling 4% and standing at 995 units. Even so, Local debt still remains among the five most expensive in the region and it still has a long way to go to pass El Salvador, next in the table.
According to a public report from the central bank of the Dominican Republic, as of October 24, 2024, Argentina’s country risk was the fourth highest on a list that includes 17 Latin American countries. It was only surpassed by Venezuela (around 22,212 points), Bolivia (1,822 points) and Ecuador (1,277 points).
Nevertheless, The reference of El Salvador, which is immediately above Argentina, is 512 unitswhich is why the indicator should still significantly deepen its bearish trend to scale a position. Likewise, the average for the region is even lower, at 440 units, while the global average (within developing countries) is about 310 units.
When will the Argentine country risk reach the average of the region?
Leonardo Chialvaanalyst at Delphos Investment, said in dialogue with Ámbito that “what is relevant is not the level, but the trend and now the speed.” In that sense, He stressed that the economic course is the correct one to reduce the country’s risk, but that there is still a high political risk.
“I I don’t see that we can quote close to the regional average until after the 2025 elections.or before if the surveys are very clear. This first ‘journey’ is to land on planet Earth since we were in Narnia. I think planet Earth is 850 bp; We will stay there for a while until the policy indicates that the process can continue,” he said.
This indicator, developed by JP Morgan to measure the difference between the interest rates paid by dollar-denominated bonds issued by the aforementioned countries and US Treasury bondsconsidered “free” of risk.
The decline in the benchmark occurred after the Minister of Economy, Luis Caputo, announced that the country achieved Financing commitments from the Inter-American Development Bank (IDB) and the International Finance Corporation for US$8.8 billionalthough the foreign currency would not arrive instantly and must be allocated to programs agreed upon with the aforementioned organizations.
The return of country risk to levels similar to those of the Latin American average is key for the Government, given that it would facilitate the return to international debt markets. As Minister Luis Caputo anticipated a few days ago, this will occur prior to the July 2025 maturities, which represent about US$5,000 million.
Source: Ambito
