The country risk fell to levels close to 400 points this Tuesday, but the Government came out to clarify that it was not an accurate figure and some analysts explained what happened.
An unusual situation was experienced this Tuesday in the city regarding a key indicator for Argentine finances and that all analysts are following closely at this time: the Argentine country risk. It fell sharply below 500 basis points at the start of the market. That caught attention and, from the Ministry of Economy, they came out to clarify that it was not accurate information. What was it that happened?
It should be remembered that the index measured by the bank JP Morgan broke 600 basis points this Monday and, today, Tuesday, January 7, the agency Reuters published that it had fallen below 500 units. This indicator fell 125 units to 444 basis points just one day after having broken a key barrier the previous day.
Likewise, the news came two days before Argentina canceled some US$4.3 billion in public debt. It was a striking fact. The market was enthusiastic, but, as was said, it was a “feint” and Felipe Núñez, head of Financial Analysis of the Ministry of Economy, came out to clarify that it was not true.
The official clarification: a mismatch
Through the social network X (ex-Twitter), he said that “It was a price mismatch due to the (imminent) payment of coupons and amortization of the bonds“. “This is not like that, obviously there is an error in the index,” he clarified. Although he assured that, “with the macro order, we are going to reach those levels.”
Along the same lines, the economist from the University of La Plata Federico García Martínez He assured, also from his X account, that it was a “mistake of the JP Morgan that does not consider that the price has settlement in T+1″. And he recalled that, in July, exactly the same thing happened (it fell 7.7% in one day and recovered 6.4% the next day).
The technical explanation of the error with country risk
Let us remember that what country risk does is measure the evolution of Argentine bonds against those of the US Federal Reserve. It is the difference in the interest that a country must pay on its debt (the surcharge) compared to the interest paid by the northern country.
What happened was that the US bank’s country risk measurement only takes into account the evolution of Global bonds, not bonars. For this reason, they only reflected the strong volatility that exists these days in those debt instruments of the Argentine Treasury due to the payment of interest and capital coupons that were announced for this Thursday, January 9. There was no catalyst that helped balance the rally of these instruments in the volatile context and that generated the mismatch or technical error in the measurement.
Therefore, Operators deduce that this Wednesday the country risk should adjust upwards again when the JP.Morgan indicator compares on equal terms to the “Global” titles of Argentina. Some sources informed Scope that “tomorrow there should be an increase of at least 100 bp by taking correct parities in the middle of the payment of rent and amortization.” Thus, the most likely thing is that it will return to between 600 and 500 basis points shortly.
Source: Ambito
I am a 24-year-old writer and journalist who has been working in the news industry for the past two years. I write primarily about market news, so if you’re looking for insights into what’s going on in the stock market or economic indicators, you’ve come to the right place. I also dabble in writing articles on lifestyle trends and pop culture news.
