The indicator climbs to a one-year high
Argentina's sovereign bonds traded lower for a seventh consecutive session on Monday, pushing JP Morgan's country risk index back toward the 700 basis point zone it last visited a year ago. The gauge stood at 678 basis points by 4 p.m., a daily jump of 30 units and its highest reading since October 28, according to Infobae. Other outlets put the figure at 675 points, describing it as the year's peak and the highest in twelve months. TN reported a 4.2% rise from the previous close and an 11.2% gain so far this month.[S1][S2][S3]
The index measures the spread between the yield on a country's sovereign bonds and that of US Treasury paper, serving as a reference for perceived investor risk and the extra cost a state faces to finance itself abroad. The rise is the mirror image of falling hard-dollar bond prices, both Global and Bonar series. Among dollar notes, the Global 2046 slipped as much as 0.75%, the Global 2041 lost 0.6% and the Global 2038 shed 0.19%, while Bonares fell up to 0.7%, led by the Bonar 2041 and Bonar 2028. Hard-dollar bonds have lost an average of 5% over the past month.[S1][S2][S4]
Local doubts and a tougher global backdrop
The climb began about two months ago, in step with rising US Treasury yields and a period of smaller foreign-currency purchases by the Central Bank in the domestic market. Investors want clearer signals on how the government will handle heavy foreign-currency payments due in 2027 and 2028, with obligations to private creditors and multilateral bodies above 21 billion dollars next year. They are also watching reserve accumulation and the pace of returning to voluntary debt markets, after the Treasury left some dollar-denominated instruments out of recent auctions because of interest rates above 12% annually.[S1][S2][S3]
Politics adds to the caution. A year before the 2027 presidential election, the market is already pricing in the political component, recalling the currency pressure of September and October last year around the midterm elections, when the dollar reached the 1,500-peso ceiling of the Central Bank's bands. Recent activity and consumption indicators show a slowdown, feeding Wall Street doubts about the medium-term sustainability of the economic program, since weak growth erodes both the ruling coalition's electoral base and tax revenue underpinning the fiscal surplus.[S1]
Abroad, faster US inflation in September revived the possibility that the Federal Reserve will raise rates at its meeting at the end of the month, keeping Treasury yields at more than two-decade highs. That makes credit costlier for all issuers and hits higher-risk countries hardest. Analysts also cited a weekly jump of up to 10% in international oil prices tied to Middle East conflicts and falling US inventories, plus the negative bias on Wall Street. Portfolio Personal Inversiones noted that Argentine sovereigns fell even when the global backdrop was favorable, with the gap accumulated since July between the two measures reaching 5%.[S1][S2][S3]
Equities slide and officials push back
The negative climate extended to Argentine companies listed in New York. Edenor led losses with a drop of up to 4.6%, followed by Central Puerto at 3.2% and banks BBVA and Galicia at 2.1% and 2.6% respectively, according to TN; A24 reported somewhat different figures, with Edenor down 3.4%, YPF 2.2%, Tenaris 2%, BBVA 2%, Telecom 1.9% and Galicia 1.7%. The official dollar rose 5 pesos to close at 1,540 at Banco Nación, while the blue dollar traded at 1,560 for sale.[S3][S4]
Presidential spokesman Adrián Ravier attributed the increase to global uncertainty, recalling that the country he said the government inherited carried a country risk above 2,500 points and arguing that today's level above 600 reflects a better Argentina with fewer risks than in December 2023. Ignacio Morales, chief investment officer at Wise Capital, described a market marked by global volatility and local financial tension, with Argentine assets hit indirectly by the negative bias on Wall Street. Economist Gustavo Ber said investors remain focused on the financing strategy, particularly after the AO29 was suspended from auctions in the past two months, and are watching for alternative funding sources and possible use of swaps.[S1]
The market will keep an eye on September trade data and the August monthly activity estimate from INDEC, along with the performance of the new MSCI Merval index on the Buenos Aires exchange. The evolution of country risk will remain a key reference for assessing access to external financing while investors stay cautious on Argentine sovereign bonds.[S2][S3]
