This Wednesday, country risk plunged again and is dangerously close to 400 basis points. The indicator compiled by JP Morgan fell 11 units to 410 points, wiping out the gains of recent sessions in one fell swoop. The news comes a day after Moody’s Ratings upgraded Argentina’s credit rating from Caa1 to B3, with a positive outlook.
Sovereign bonds, both local law and Global ones, celebrated the news and rose up to 0.4%. The Merval, meanwhile, turned green and climbed 2.2%, driven by financial sector stocks: Banco Supervielle (+4%), Grupo Financiero Galicia (+3.7%), and BBVA (+3.2%). On Wall Street, Argentine ADRs also traded positively, led by Banco Supervielle (+4.4%) and Grupo Financiero Galicia (+3.7%).
Moody’s improvement surprised no one in the market, but confirmed that Argentina is no longer a country on the brink of default. «When all three rating agencies point in the same direction, the signal ceases to be an isolated data point and becomes a trend,» explained Tobias Sánchez, portfolio manager at Cocos. «What matters is not the letter itself, but what it confirms: that Argentina has begun to show improvement on more solid foundations,» he added.
However, optimism should be tempered. «We are still in risky debt and far from investment grade,» warned Sánchez. But the credit improvement expands the universe of funds that until now could not invest in the country. Puente’s Research team agreed that no sharp adjustment is expected after the news, as the debt revaluation had already largely occurred following the actions of Fitch and S&P.
In the foreign exchange market, the official wholesale dollar abandoned its downward trend and rose $3.19, trading at $1,480.87. It is 19% below the upper limit of the exchange rate band. The retail exchange rate remained stable at $1,500 at Banco Nación. Financial dollars, meanwhile, showed no changes: the MEP traded at $1,508.60 and the contado con liquidación at $1,562.87. The blue dollar, meanwhile, rose $5 and sold at $1,550, its highest value of the year.
The drop in country risk and the improvement in the credit rating are signs that the Argentine economy is leaving the abyss behind. But beware: there is still a long way to go before declaring victory. Investors know the road is long and full of obstacles. For now, the market is giving a vote of confidence, but the ball remains in the air.
Para mí esto es un cachetazo a los zurdos que nos tenían fundidos. Moody’s nos da la razón, el riesgo país se derrumba y los bonos vuelan. Viva la libertad carajo, dejamos de escuchar a los populistas y el Merval trepa. Abstenerse de llorar, que la fiesta es de los que creemos en el mercado.
che 400 puntos? para mi es una miseria los bonos suben xq los fondos buitres se llevan todo mientras el pueblo se caga de hambre esto huele a festin de ricos no al fin del default viva la patria socialista mierda apoyá a los trabajadores no a los especuladores