Argentina's Risk Premium Drops Below 1000 Points

Argentina's financial markets show strong performance as the risk premium drops below 1000 points for the first time in five years, signaling a potential economic recovery.


Argentina's Risk Premium Drops Below 1000 Points

The country risk in Argentina reached 966 basis points, falling below 1,000 points for the first time in five years after a successful week in the markets. This indicator, which reflects the overcost of debt in relation to U.S. Treasury bonds, has significantly decreased compared to its peak of 4,300 points in March 2020 during the global economic paralysis caused by the pandemic.

Throughout the year, dollar bonds under New York legislation have experienced notable increases, between 60% and 78%. Additionally, so far in October, the country risk has dropped by 25%, accumulating a decline of 49.3% over the year. This positive outlook was reflected in the surge of Argentine stocks on Wall Street, such as BBVA, Loma Negra, and Telecom.

The Merval of Buenos Aires also showed a 1.2% increase on the day, reaching a growth of 101.4% in pesos and 68.5% in dollars over the year. Experts attribute this performance to various factors, such as the improvement in the country's payment capacity and progress in financial agreements with institutions and multilateral organizations.

On the other hand, stability in parallel dollar rates contributed to maintaining a favorable climate in the financial markets. Analysts believe that the lifting of capital controls could be closer, supported by Argentina's exclusion from the FATF gray list, which preserves the country's reputation and facilitates access to international financing.

In summary, the week has been very positive for Argentine assets, with a significant decrease in country risk generating confidence in the markets and driving the growth of bonds and stocks, marking an upward trend that reflects the improvement in the perception of the Argentine economy.