Argentina's country risk rating dropped below the 500-point threshold on Tuesday, falling to 493, its lowest level in nearly eight years.
The indicator prepared by JP Morgan dropped 3.3 percent and has dropped by 13.1 percent so far in January.
The drop comes amid an improvement for Argentine debt bonds, increasing the likelihood of a return to international debt markets.
Country risk fell 20 points in early trading Tuesday to stand at 493 basis points. That's the lowest since June 11, 2018, when the indicator closed at 487 points.
Analysts agree that, with these values, the possibility of Argentina rejoining international debt markets is opening up.
They further highlight the issuance of bonds by Ecuador – a country comparable to Argentina – on Tuesday, at an annual rate of 8.75 percent.
That level would enable Argentina to refinance part of the principal of major debt. The accumulation of international reserves at the Central Bank will be key ahead of a potential launch on the international market.
The decrease of the country risk is due to bonds being quoted in the black. Bonares rose by 1.34 percent (AL41D) and Globales by up to 1.77 percent (GD46D).
Cabinet Chief Manuel Adorni celebrated the country risk milestone. “It’s the result of having done what needed to be done. Period,” he posted on his X account.
Ignacio Morales, Chief Investments Officer de Wise Capital, said country risk could continue to fall, the performance being contingent on upcoming spcial sessions of Congress, with the employment and tax reform bills on the agenda.
JP Morgan's country risk rating is a financial indicator which measures the likelihood that a State will not meet its financial obligations (foreign debt payment, principal or interest) to its foreign creditors.
For its calculation, the 10-year US Treasury Bond is used as a basis, since it is considered the safest asset in the world (“zero risk”).
The country risk is stated in basis points (bps), where 100 basis points equal one percent. That is, 400 basis points mean four percent above the yield of the US Treasury Bond.
– TIMES/NA/PERFIL
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