Presidential hopeful Alberto Fernández said Thursday that no-one wants a default for Argentina and he's ruling it out if elected to the Casa Rosada
The Frente de Todos candidate, speaking at an event at MALBA hosted by Clarín, delivered his clearest pledge yet to repay the country’s debt while trying to reassure investors who fear his government could implement capital controls.
He added that he’s more worried about debt maturing in 2021 than next year. Bonds gained on his comments, with the yield spread over US Treasuries narrowing 32 basis points to 17.82 percentage points.
“There’s no possibility that Argentina will fall into default if I’m president,” Fernández said, adding that capital controls aren’t the solution either. “I’ve already lived through a default and it’s very hurtful for society. No-one could want a default as a solution.”
Investors have been punishing Argentine bonds for fear that Fernández would restructure Argentina’s debt if elected on October 27. He has called on the government to renegotiate a record US$56-billion credit line with the International Monetary Fund, saying it’s impossible to repay that loan on time.
With investors and analysts discussing potential recovery values in an event of a restructuring and credit-default swaps pricing in a greater than 80 percent chance of non-payment over five years, Fernandez said seeking a haircut on debt is also out of the question.
“No-one can seriously suggest a haircut because it’s debt that’s been taken on two years ago by a democratically elected government,” he said.
The Frente de Todos candidate appeared to be trying to calm investors who reacted to his strong finish against President Mauricio Macri in an initial round of voting by battering Argentina's stocks and currency.
Fernández said a default "is a solution that sets us back" and said it's "an error" to raise the issue.
He said that if elected, he would maintain a "cordial, kind and respectful" relationship with US President Donald Trump, who has a personal relationship with Macri dating back years from their days as businessmen.
Speaking at the same forum, Macri attributed the loss to an "angry vote" by many Argentines who have continued to lose purchasing power to a high inflation and a weak currency while poverty rises. He said that the results of the primaries were a "sucker punch."
"First, I need to pick up the glove after this blow because before being a president, I'm a person, and clearly, the result was a battering," Macri said.
Macri also said that IMF officials will visit Argentina next week to track the country's commitments on its loan deal and he asked his leftist rivals to offer detailed economic plans to calm investors and help dispel uncertainty.