Global banking panic effect: country risk soars and bonds collapse

Argentine bonds plummet 5% this Monday, March 13, due to the crisis that caused the fall in two investment banks in the United States and, consequently, the country risk shoots up 10.7% to 2,444 basis points. Meanwhile, the Argentine papers in Wall Street they yield 4% and the S&P Merval falls more than 1%.

With the panic spreading at the decision-making tables, Argentine bonds cannot find a floor and continued with the falls that had already begun last week, raising the value of the country risk to 2,444 basis points.

In the fixed income segment, bonds in dollars fell generally up to 7.4% thanks to Global 2041, followed by Global 2035 (-3.5%) and Bonar 2029 (-3.3%).

The collapse is due to investors’ fear of contagion that could cause the collapse of Silicon Valley Bank and Signature Bank, two financial institutions with portfolios oriented towards the innovation economy..

The concern of investors could not be calmed even by the President of the United States himself, Joe Bidenwho announced that it will protect investors who had deposited their money in these banks.

Learn more – Follow the price of the blue, official, CCL and MEP dollar in Argentina

S&P Merval and ADRs

The leading S&P Merval index is trading down 1.81% at 232,326.86 points, after falling 3.84% last week. “The evolution of the situation of Silicon Valley Bank will be decisive. Although the futures today settle between the greens (dollars), since the market would discount that a solution to the problem was reached (with the IMF)”said Portfolio Personal Inversiones.

In the next few hours the Argentina and the IMF will announce new goals of the program in progress, but which was closed prior to the disclosure of the banking collapse in the United States and whose effects were not contemplated. Investors speculate that this Monday the IMF will make a disbursement of 5.2 billion dollars official after modifying the central bank’s (BCRA) reserve goal for 2023 and raising details to control the fiscal deficit.

For its part, the global collapse is felt in Argentine ADRs that operate with falls in almost the entire list. The most pronounced decreases included Transportadora Gas del Sur, Irsa, Despegar and YPF between 3.6% and 3.4%. Conversely, Loma Negra (2.4%), Globant SA (1.8%) and Pampa Energía (0.5%) rose.

Global financial uncertainty opens a new storm front for the Argentine economy as fears of a retraction that will affect the country’s already weak exports will intensify.