Investors start to ponder debt re-negotiation scenarios
The economic uncertainties following the surprising results in Argentina’s primary elections led to presidential hopefuls, lead investors and analysts to start seriously considering the possibility of the country renegotiating its debt with private bond holders under a new administration.
The funds granted by the International Monetary Fund (IMF) are enough to cover 54 percent of the country’s financial needs this year, reducing the need to refinance the dollar-denominated notes known as Letes, while not needing to issue new domestic or international bonds either.
That scenario changes drastically in 2020. The government’s financial program assumed that Argentina will re-gain access to debt markets to roll over its coming debt maturities, helped by favorable conditions that would include affordable interest rates. But those conditions are far from what was initially expected by the Macri administration.