Argentine assets fell to Wall Street for fear of a possible debt restructuring

WASHINGTON.- On another "black Monday", Argentina's shares and bonds suffered another hard plague
Wall Street, despite strong speculation about a possible restructuring of its debt, encouraged by the statements of Alberto Fernández this weekend, and pending a signal from the new economic team, under the command of Hernán Lacunza, and the International Monetary Fund (

MFIs

).

The new wave of sales that has punished Argentine badets in New York has once again shown a community of investors still very sensitive to signals coming from Argentina and which is missing, for the moment, from a Clear horizon to volatilize volatility and provide enough certainty about the future to restore the confidence needed to encourage buying.

The main novelty left by operations in New York was the new bond penalty, with Bonar's lead 2024, which dropped 8.4% and led the country to jump 13.6%. one hundred to 1883 points. Among the ADRs, the bank's shares were the most affected, with double-digit losses: Grupo Supervielle dropped by 15.8%; Galicia lost another 15.7%; Macro, 15.3% and BBVA Banco Francés, 14.4%.

Without the operations in Argentina for the holidays of August 17, anniversary of the death of General José de San Martín, business in New York has once again shown the fragility of Argentine badets and the impact of the signs arising from the campaign
Alberto Fernandez, president elected virtual, in the eyes of the market, after the primaries Sunday, August 11.

The previous week,
Emmanuel Álvarez Agis, one of the leaders of Fernández's economic team, attempted to bring a message of calm to Wall Street during several conference calls with badysts and investors, in which he attempted to make Sprout hope that Fernández will lead a moderate government. Álvarez Agis also downplayed the possibility of debt restructuring. But on Sunday, Fernandez said in an interview with Clarín that he had to sit down and discuss "one by one" with the creditors, and praised the work of
William Nielsen during the Néstor Kirchner government, which initially offered bondholders a 75% reduction in indigestible market debt, which had subsequently been improved.

In the morning, Nielsen himself went out to put on cold clothes, stating in an interview with the Bloomberg agency that they were not planning debt restructuring. I can not do it.

"People have kept what Fernandez said this weekend, there must be solutions soon, this uncertainty will not end any longer, Fernandez must somehow calm the markets," said Alberto Bernal, of XP Investments.

The statements have highlighted the auction spirit that governs bonds, in a market that reacts in the blink of an eye to an economy without anchor and in an abnormal political environment. On Wall Street, the investment community badumes there will be some type of debt swap. The question is rather what restructuring will look like, rather than whether there will be one or not, as badysts and traders have transcended it in recent days. A very sensitive market in hectic weather.

An XP Investments report released prior to the start of operations had put the risk of "aggressive restructuring" in perspective, but indicated that prices had already internalized "the looming possibility of debt restructuring." ".

The new plague of investors over Argentine badets appeared as the new finance minister, Hernán Lacunza, launched the first measures in Buenos Aires and took advantage of the low margin of the long weekend to absorb figures and priorities of its management. during meetings with the "small table" of Change; its predecessor, Nicolás Dujovne, and the president of the Central Bank, Guido Sandleris.

Waiting for the IMF

Eyes and ears are turning to the next movements of the Fernández government, but also to Washington, where the International Monetary Fund (IMF) has yet to confirm when it will send to Buenos Aires a new mission headed by Roberto Cardarelli, a trip crucial and decisive for the future of the historic Stand-By Agreement for an amount of about $ 56 billion, the only remaining active foreign funding line of Argentina.

Cardarelli's trip was also involved in speculation as to whether this would happen or not. If completed, the mission will be marked by the new political and economic context left by the presidential primaries. The Fund had its first contact with Fernández at the end of June and it turned out to be a very good meeting.

Before the primaries, Cardarelli's trip was meant to be the easiest of all those he had done in Buenos Aires. The Italian economist, head of mission for Argentina at the IMF, has only been to verify the achievement of the objectives of the program of the second quarter, which the government has achieved. That would be enough to release the $ 5,400 million slippage scheduled for September.

But the outcome of the primaries changed everything. The polls have strongly criticized the government of Mauricio Macri and its economic policy, appointed by the Fund as the largest loan in the history of the agency. The last shot of the market brought the dollar down to $ 60 and pulverized the value of the bonds, which fell to the ground.
fault. Cardarelli's latest report warned that the program was facing "significant downside risks" and that debt sustainability remained "extremely vulnerable" to shocks such as post-election.

Given the new scenario, economists are already predicting that this year's inflation will be higher than that of 2018 and that the recession will be longer than expected. Cardarelli also warned in his latest report that this would lead to increased poverty and less support for the government's adjustment policies.

So concrete, Cardarelli's mission will have as main task to elaborate a new diagnosis on the Argentine economy and on the future of the confirmation agreement, which will be reflected in the staff report which will have to be submitted to the Council of administration. This is an essential report for the country: the board of directors must decide whether or not to send a new project worth $ 5,400 million. If this is not the case, the crisis will worsen, the economists agreed.