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Returned caution about government debt and country risk reached 700 basis points



On bonuses US citizens in dollars turned to decline this week before profit taking after the increase from the beginning of this year.

Profitability, which evolves counter to prices, has stabilized for emissions in dollars, and with the Argentine and New York Legislation, in a range from 10 to 11.7 percent per year in the middle part of the curve.

On Risk on the ground JP Morgan, who measures the differential of the US footprints with their new peers, arrived in the afternoon 701 basis points for Argentina, to break from the minimum of 2019, all 664 from January 24 last year. At closing operations, the indicator came up 688 units, after the president of the Federal Reserve of the United States, Jerome Powell, will say that the Central Bank of North America I would be patient when it comes to increasing the price of money this year, amid growing uncertainty about the US economy.

Although in 2019 the Argentine risk in the country takes more than 100 basis points, in the last wheels found resistance to keep going back

"It's out of existence factors that play in favor from developing countries and, consequently, to Argentina, and that Argentine titles offer more interesting returns in comparison with other countries, the uncertainty about the election the October presidential election is again in place, "the report said Survey for traders.

With rate of 2,695% for the 10-year US government bond, remains Argentina far from the possibility of issuing public debt in international markets, where it should offer yields up to 10% per year in dollars to convince investment funds.

The still-high JP Morgan index for Argentina appears in fall context of the prices of government bonds of states new ones, which is influenced by approaches to sustainability of debt according to current account and fiscal dynamics, two weak points when there is a debate about the domestic economy.

Experts of Balanz Capital they stated that "on inflation, especially in countries like Argentina, is factor to change the trajectory of reduce risk in the country in the long run, which is generally underestimated. "

"We believe that the structural decline in the inflation rate is necessary condition not only to reduce local capital costs, but also to allow developing countries to increase the percentage of debt in local currency in the calculation of the total gross debt, "Balanc said.

Unlike Argentina, whose government debt placed in local currency does not reach 20% of the total number, Turkey has 59% of its liabilities in liras; Brazil has 78% of its gross domestic debt in GDP in real and Mexico it has 63.8% of the total public debt in Mexican pesos.

"In contrast, the The Argentine dollar denominated in dollars represents 83% of the total sovereign debt in force, which means a potentially unpleasant catalyst for a chronic dependent on devaluations with a low export-GDP ratio, "stressed Balanc's analysis.


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