Since the start of the war in the Middle East, the country risk Argentinean exceeded 600 points again and he can’t get down from there. So far in March, the indicator has added 61 units and complicates the Government’s chances of issuing debt in the international market.
Part of the increase in country risk can be explained by the global uncertainty, the crisis of oil and the rise in the US debt rate. Another, however, responds to local factors, since the indicator created JP Morgan It has been on the rise since before the war.
“Despite the notorious macro order, the Argentine financial overcost rose more than 130 basis points since the end of January and once again exceeded 600 points. At this level the doors of the international market remain closed,” explained a report by GMA Capital.
The shock in the price of oil generated a rise in US interest rates, which increases the cost of funding for emerging countries. (Photo: REUTERS/Lucy Nicholson).
And he completed: “The conflict in The Middle East explains part of the movement. The spreads emerging markets rebounded from lows and the rate of Treasury (US bond) at 10 years rose nearly 30 basis points in just a few wheels. In this context, Argentina, which had reached 500 points only 3 months ago, corrected with greater magnitude.”
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The consultant Outlier agreed with the diagnosis: “A higher rate floor makes those who already have more committed access to the market more risky, because the conditions for refinancing worsened. Therefore, risk premiums increase with the rise in the risk-free rate and the conditions of access to the international market for emerging markets deteriorate.”
For analysts IEBMeanwhile, taking into account the international tension and the lack of clear news at the local level, it is unlikely that in the short term there is a consistent decline in country risk. On the contrary, they expect it to continue moving within current levels.
Local factors that influence country risk
However, there are also domestic factors that explain the rise in country risk. First of all, G.M.A. pointed out that the Argentina faces maturities for US$30,000 million until 2027 and does not have a clear source of financing in the market.
“The returns on securities in dollars at these levels (again above 10%) remove the possibility of fantasizing about a prolonged capital inflow. A high country risk increases the possibility that the market itself will change its expectations and cause an exchange rate slide,” they warned from LCG.
The rise in Argentine bonds since the end of 2023 increased the country’s weight in foreign investment portfolios. (Photo: Brendan McDermid/Reuters).
Faced with this scenario that makes international financing more expensive, the minister Luis Caputo He once again ruled out the possibility of Argentina placing debt on the market. On the contrary, the official said that There are cheaper anchoring alternatives and assured that it has the necessary dollar sources to cover maturities with bondholders until July 2027.
Another domestic factor that explains the persistence of country risk at these levels is the strong rise in Argentine bonds since the change of Government. The report of G.M.A. cited estimates from the consulting firm 1816 which indicated that the market value of sovereign and corporate bonds in the hands of international investors increased more than 60% since the end of 2023.
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This means that, even without new debt issues, Argentina’s weight in investment portfolios grew. “For returns to go down again, a change of post is needed between the holdersthat is, a rotation towards long-term investors,” he said. GMA Capital.
Finally, that same company highlighted that the real economy brings noise to the evaluation that investors make of Argentina. In this regard, he highlighted that this week the increase in the unemployment rate was known about the end of 2025 and a 5.3% drop in the Consumer Confidence Index prepared by the Di Tella University. “Going forward, the key will be for advances on the macro front to begin to materialize more clearly in microeconomic dynamics,” the work concluded.
