The country risk continues to fall and is already the lowest in four years

Despite the holiday in Argentina, bonds and stocks continue to recover in the world. With this, The country risk drops another notch and reaches 1,108 basis points, a new record in the Milei era and the lowest in four years.

This improvement occurs in the midst of a rise in bonds, which are recovering in New York between 0.5% and 1%, while shares rise up to 2.5%, led by Mercado Libre.

Until now, the best result of the current management of this JP Morgan indicator that measures the excess cost of Argentine debt with respect to United States Treasury bonds had been achieved on Wednesday of this week, when it reached 1,121 points. With this, it broke the previous floor of 1,148 points from April.

So far in October the country risk has dropped 14% and is down 42% for the year.

With today’s drop equals the record of September 11, 2020 and it is one step away from being the lowest in five years. On September 10, 2020, the day that Martín Guzmán carried out the debt exchange, the exchange of the old bonds for the new ones meant that in a few hours the country risk went from 2,147 points to 1,083, although that same day it closed at 1,104, to go to 1,108 the next day.

In 2019 it reached the 629 points in the first part of the year and dropped to 2,546 after the victory of Alberto Fernández. In 2020, the pandemic meant that in March, when the world was convulsed by the stoppage caused by Covid on global trade, the indicator climbed to 4,519 points. As the economies were reactivating, the country risk decreased in all peripheral countries and the same thing happened with Argentina.

Finally, the debt exchange carried out by Martín Guzmán and which achieved high adhesion caused it to drop to the area of ​​1,100 points. But that calm did not last long and after a few weeks it went to 1,500 points until reaching 3,000 after Guzmán’s departure from the ministryin July 2022.

With Sergio Massa at the head of the Treasury Palace, the risk averaged 2,500 points. And when Luis Caputo’s management began, he marked 1,935 points.

The country risk reflects the level of investor distrust on the chances of compliance with the payment of the debt. At high levels, more uncertainty and less chance that the country will be able to take on new debt. With a country risk like the current one, Argentina should borrow at a rate of no less than 16% in dollars, something unaffordable.

Argentina’s history of default means creditors are asking for rates far higher than those faced by its neighbors. The country risk at 1,108 points It is five times the record of Uruguay and four times that of Brazil. To achieve acceptable values, it should remain below 700 points, a record that was reached, with peaks and valleys between 2006 and 2019.