2023-12-13 17:40:00
Hoy 14:40
Los Argentine bonds They climbed to the highest level in two years after the Government of President Javier Milei announced the first batch of emergency measures aimed at reactivating the economy.
Bonds due in 2035 rose 1.3 cents to 34.9 cents on the dollar, the highest level since September 2021, according to indicative pricing data compiled by Bloomberg. Other stocks were also advancing, driven by speculation that the country might have a way to revive growth, no matter how painful the process may be for the average citizen.
The “shock therapy” package announced Tuesday afternoon by Economy Minister Luis Caputo included a peso devaluation of more than 50%, along with massive cuts to public spending equivalent to almost 3% of gross domestic product. . Caputo presented plans to halve the number of ministries, cut transfers to provinces and suspend public works projects. Transportation and energy subsidies would be drastically reduced, while slight increases would be made to some social programs to try to mitigate the impact.
Trust effect? The upward rally continues for local stocks and bonds
“Investors are taking the announcements as the first steps in the right direction,” said William Snead, a strategist at BBVA in New York. “There is a lot of enthusiasm, but the next few months will be key. Inflation will skyrocket and the reduction in spending should have an economic impact, so there comes a time to face reality.”
The drastic measures are intended to save an economy battered by years of mismanagement and excessive spending. Argentina is headed for its sixth recession in a decade, with inflation exceeding 140% and more than 40% of the population mired in poverty.
Los provincial bonds They were trading little changed on Wednesday: Entre Ríos securities due in 2028 were trading at around 76 cents on the dollar, while Córdoba bonds due in 2029 were around 77 cents.
The Government will issue sustainable bonds after the runoff to finance environmental projects
Rises in Argentine debt could be limited by concern among some investors that the measures announced last night do not go far enough, as well as speculation that mercy will have difficulty advancing his ideas in Congress.
Hours after the television announcements, the Ministry of Economy indicated that a 2% monthly devaluation path for the exchange rate is immediately established.
“The initial focus on fiscal measures will provide reassurance,” said Alejo Costa, chief Argentina strategist at Banco BTG Pactual SA. However, investors will soon “demand additional details to understand the full implications of the measures.”
Translated by Paulina Munita
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