Argentina: Is corporate debt an opportunity?

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Dmitry Griko of EG Capital Advisors
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Dmitry Griko of EG Capital Advisors

The yields on Argentinian government debt have spiked sharply in recent weeks on the back of the primary elections held in mid-August, when President Mauricio Macri unexpectedly lost to Alberto Fernández, close ally of ex-president Cristina Fernández de Kirchner who has historically supported a socialist political agenda.

As a result of the subsequent devaluation of the currency and high dependence of Argentina on foreign currency borrowings (only 22% of the debt was denominated in peso as of 30 June), the government may find itself unable to access international capital markets and roll over its short-term debt at affordable interest rates, leading the country to a very probable debt restructuring. The polarisation of bond markets: Austria versus Argentina In case of a restructuring, private creditors are very likely to take a major haircut. At the end of Q1 2019, about $160bn of Argentina's national ...

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