Political Risk Latin America Blog @PolRiskLatam

Default Risk Sinks on Paris Club, CPI Reform: Argentina Credit

Posted in News and Articles, Political Risk by politicalrisklatam on November 25, 2010

by Drew Benson for Bloomberg Business Week, November 25th, 2010.

Argentine bond risk is falling the most in the world this week after President Cristina Fernandez de Kirchner pledged to open talks with the Paris Club on $6.7 billion in defaulted debt and redesign the consumer price index.

The cost of protecting Argentine government debt against non-payment for five years with credit-default swaps tumbled 51 basis points, or 0.51 percentage point, in the five days through yesterday to 659, according to CMA data. The next-best performer among countries was Iceland, whose default risk sank 6.7 basis points.

Fernandez said Nov. 16 the Paris Club group of creditor nations accepted Argentina’s request to start talks to restructure the debt without International Monetary Fund oversight. The government also asked the IMF this week to help revamp the national consumer price index amid concern the data doesn’t reflect the true inflation rate.

“These are all very good steps and very clear signals about the direction in which they seem to be moving,” said Gunter Heiland, an emerging market debt portfolio manager who helps oversee more than $2.6 billion worth of assets, including an “overweight” Argentine position, at Greenwich, Connecticut- based fund Gramercy. “We find it very encouraging.” (continue reading… )

 

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