Argentina

Argentina has undone a huge amount of positive work done in reaching an agreement to restructure its debt through its financial mismanagement and the government only has itself to blame, according to Raphael Kassin, Citywire reported. Emerging market debt veteran Kassin made the comments during the most recent episode of our sister publication Citywire Selector’s EM Insider podcast.

Argentina’s wide gap between its official peso spot rate and closely watched prices of the currency in alternative and black markets has narrowed amid signals the central bank will tighten its funding of government spending, Reuters reported. The gap between the peso rates has soared this year amid tight controls on access to dollars, concerns over the economy and money printing to pay for the indebted country’s emergency response to the COVID-19 pandemic. But since a peak around Oct.

Sovereign default risks are on course to rise further in 2021, with Iraq, Sri Lanka, Angola and Gabon at high probability of default, say Goldman Sachs analysts, Reuters reported. Five sovereign debt defaults or distressed debt exchanges - in which investors swap their debt for new bonds, often with longer maturities and a reduced value - have already happened in 2020 in the aftermath of the COVID-19 crisis, the most in around two decades.

Some of Argentina’s biggest bondholders have issued a sharp rebuke to the government over its handling of the country’s deteriorating economic situation, just a few months after reaching a compromise to restructure $65bn worth of debt, the Financial Times reported. In a statement released on Thursday, two creditor groups at the heart of the recent negotiations to resolve Argentina’s unsustainable debt burden accused the government of putting forward policies that “undermine” its own economic recovery, such as its recent decision to tighten capital controls.

Argentine bondholder groups slammed the government on Thursday over economic policies they said were undermining investor confidence in the country, which emerged from a sovereign default in September after a $65 billion restructuring, Reuters reported. Two of the groups involved in that debt revamp said in a statement that policies since then had “failed to restore confidence” and instead had “dramatically worsened the country’s economic crisis.” Bond prices have dropped sharply since the exchange.

Investors are giving up on Argentina just six weeks after it pulled off a $65 billion restructuring, Bloomberg News reported. The country’s overseas bonds have plummeted more than 20% since early September, the world’s biggest drop in that span. Morgan Stanley calls it the worst rout in the aftermath of a restructuring in at least 20 years, and it comes despite the nation winning a whopping $38 billion of debt relief from creditors. Those same investors have been dismayed at what followed.

During a pandemic that has wreaked havoc with global travel, Enrique Beltranena is something of a rarity: a happy airline boss. Volaris, his Mexican low-cost airline, has added, not cut, routes during the crisis, has a healthy balance sheet and is “cautiously optimistic” in its outlook, he said.

Countries do not usually gain friends when telling creditors they can’t pay them back. Yet Ecuador earned serious plaudits as it went about restructuring $17.4bn of bonds this year, GlobalCapital reported. The Ad Hoc Bondholder Group that owned more than half of the sovereign’s bonds even said that the process “set a precedent” for Covid-19 era restructurings. Jan Dehn, head of research at Ashmore, part of the Ad Hoc group, explains that on one hand the group was referring to modifications in collective actions clauses that some creditors hope will become standard practice.

An International Monetary Fund mission concluded a visit to Argentina on Sunday, after several days of preliminary talks aimed at repaying about $44 billion owed by the cash-strapped government to the fund, a government source said, Reuters reported. The delegation of IMF economists arrived early last week, led by Julie Kozack, Western Hemisphere deputy director for the IMF. “This first visit has concluded,” the government source told Reuters on condition of anonymity. Argentina recently restructured about $100 million in non-performing bonds.

Nearly half of Argentina’s population was living in poverty in the second quarter, a sharp increase from last year, as the country’s longstanding economic crisis deepened due to the coronavirus pandemic, researchers estimated on Wednesday, Reuters reported. The Catholic University of Argentina (UCA) estimated the poverty rate spiked to between 46% and 47% by the end of June following months of strict lockdowns to battle the spread of the virus.