Argentina bonds pop, risk drops to lowest since 2020 debt revamp

Reuters

Argentina bonds pop, risk drops to lowest since 2020 debt revamp

2024 10월 15, 오후 5:06 GMT

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Updates with additional detail, quotes, graphic

By Jorge Otaola

BUENOS AIRES, Oct 15 (Reuters) -Argentina's sovereign bonds jumped on Tuesday while the country's risk index fell to its lowest level since a major debt restructuring in 2020 amid rising confidence among investors in the tough cost-cutting of libertarian President Javier Milei.

The economist and former pundit who won a shock election last year pledging to slash spending, has helped the South American country improve its finances, rebuilding reserves, tamping down inflation and overturning a deep fiscal deficit.

That's got down well with investors, cheered by the tighter fiscal discipline and lower perceived risk of default, despite Argentina falling into a recession and poverty rising above 50%. Inflation remains in triple digits, but is slowing down.

On Tuesday sovereign bond prices popped some 3% on average, while a closely-watched risk index droppedby nearly 50basis points to below the level in 2020 when the country pulled off a major debt restructuring to defuse a damaging default.

The index, a yield spread between Argentine and U.S. sovereign debt, is at around 1,060 basis points. It remains one of the highest in emerging markets, but has fallen sharply from a peak of around 3,000 points in July 2022.

"The improvement in all these indicators reflects stability, the good investment climate for firms and the confidence of the markets in the economic stabilization plan the government is carrying out," presidential spokesman Manuel Adorni said.

He added that lower country risk meant better access to credit markets for private sector companies, leading to better investment, jobs and economic growth.

Milei had made a "zero deficit" a non-negotiable aim, while his government - despite limited seats in Congress - has scored some important legislative wins by gaining allies from the main conservative bloc.

The country also got a reprieve from the International Monetary Fund (IMF), which reduced surcharge payments this month. Argentina is the Washington-based lender's largest debtor by far with a $44 billion program.

"There are favourable winds blowing because of the government's position on macroeconomic issues," said local financial analyst Marcelo Rojas.

Argentina: Country Risk https://reut.rs/3zSO4Lo

Argentina: Country Risk (Interactive) https://reut.rs/3YjDqqF

Reporting by Jorge Otaola; Editing by Kylie Madry

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