Argentina Bonds Slump as Economy Chief Criticizes IMF Proposals

Argentine dollar bonds fell the most since September after Economy Minister Martin Guzman criticized spending cuts proposed by the International Monetary Fund, highlighting the difficulties ahead in securing a new agreement, Bloomberg News reported. Notes maturing in 2041 dropped 1 cent to 32.8 cents on the dollar, the biggest decline since Sept. 20, according to data compiled by Bloomberg. Credit-default swaps widened the most in five weeks. While Argentina and the IMF are “on the same page” on the level of foreign reserves needed to support the country, they disagree on how quickly the government must reduce its fiscal deficit, Guzman said late Wednesday as he laid out his most detailed vision yet for negotiations with the Fund. “A fiscal middle ground is possible between the IMF and the government,” said Nathalie Marshik, a managing director for fixed income at Stifel Nicolaus & Co. “But we find the lack of details this far in the conversation worrying, indicating a deal is not imminent and the market will likely have to contend with negotiations going close to the March payment deadline.” Argentina owes the IMF $2.8 billion in March, a payment many analysts see as a deadline to reach a deal considering the central bank’s depleted reserves. The two sides are in talks to restructure some $40 billion in loans. The IMF’s proposal would probably “halt the economic recovery that Argentina is witnessing and is essentially a program of real spending cuts,” Guzman said during a presentation to governors in Buenos Aires, alongside President Alberto Fernandez. Read more.
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