Sinking Liquidity for Argentine Debt Adds to EM Investor Woes

Trading Argentine bonds has become a test of endurance as the prospect of a possible default triggers wild price swings and volume dries up, Bloomberg News reported. The Liquidity Assessment Scale of 1 to 100 (100 being the most liquid) slumped to 12 on Wednesday for the South American nation’s bonds from 68 just three weeks ago. “There is a lot of hysteria in the market and it is causing a lot of uncertainty on valuations,” said Jason Devito, a Pittsburg-based money manager at Federated Investment Mgmt Co., which has $502 billion under management. The peso is hovering near record lows, extending this year’s worst decline in emerging markets, after opposition candidate Alberto Fernandez won a landslide victory in the Aug. 11 primary, making him clear favorite for the Oct. 27 presidential election. Read more