Political Risk Latin America Blog @PolRiskLatam

Default Risk Tumbles Most in World in Fernandez Economy: Argentina Credit

Posted in News and Articles, Political Risk by politicalrisklatam on September 6, 2010

by Ben Bain and Drew Benson for Bloomberg, September 6th, 2010.

Argentina’s bond risk is falling the fastest of any country as South America’s second-biggest economy heads toward its largest expansion since 1992, increasing the government’s ability to pay its debt.

The cost of protecting Argentine debt against non-payment for five years with credit-default swaps plunged 274 basis points, or 2.74 percentage points, to 854 from June 3 through last week, the biggest decline worldwide for the past three months, according to CMA DataVision.

Argentina’s credit-default swaps became cheaper as an economic expansion that President Cristina Fernandez de Kirchner said last month quickened to a 9 percent annual rate increased tax revenue. They may tumble as much as 200 basis points more by the end of the year, said Nick Chamie, global head of emerging- markets research in Toronto at RBC Capital Markets, a unit of Canada’s biggest bank.

“All in all, it’s good news for Argentina with regards to economic prospects and overall risk premiums,” Chamie said. (continue reading… )

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