Argentina achieves support in the G20, but the market gives 94% probability of default


The dialogue with the IMF “is moving in the right direction,” the US Treasury secretary said.

After the International Monetary Fund (IMF) recognized last week that Argentina’s debt is unsustainable, the market is preparing for a negative scenario, with an increase in country risk and the probability of a cessation of payments. The country risk, measured by JP Morgan, advanced 20 units, to 2,078 points, while the possibility of the country facing a default rose to 94%, according to the implicit probability of Argentine default insurance (CDS).

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The Argentine market is closed Monday and Tuesday for “carnival holidays”, but the activity abroad did reflect the signs of distrust, aggravated by the expansion of the coronavirus in Italy.

The shares of Argentine companies that operate abroad (ADRs) fell more than 7% at the beginning of the day, then stabilized around a 5% decline. Among the most affected roles were those of YPF (-5.16%), Banco Macro (-4.35%) and Tenaris (-4.87%).

G20 support

Investors are nervous even though Argentina gained support in its restructuring process at the weekend meeting of the finance ministers of the 20 largest economies in the world (G20) in Riyadh.

The secretary of the Treasury of the United States, Steven Mnuchin, celebrated the conversations of the country with the Fund, after meeting with the minister of Argentine Economy, Martin Guzmán.

“There are many problems that still need to be addressed,” Mnuchin said in an interview with Reuters. “The talks they have with the IMF are preliminary, but they are moving in the right direction.”

Guzman, in a Twitter post, used the word “productive” to describe the meeting with Mnuchin.

Fund officials informed the finance ministers and central bankers of the G20 about the situation in Argentina.

On Saturday, after meeting with the IMF managing director, Kristalina Georgieva at the same summit, Guzman said Argentina agreed to start consultations with the agency – to which it owes US $ 44 billion – that could lead to a new program with the Fund .

On Wednesday, the IMF announced that Argentina’s public debt was not sustainable, so its private creditors must make an “appreciable contribution”, a strong gesture of political support to the government of the Peronist Alberto Fernández.

Buenos Aires, which has breached its debt obligations eight times, faces tough negotiations with creditors and the IMF to restructure about $ 100 billion in debt that the Argentine government says it cannot pay unless it can revive the increase.


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