Argentina

Another month, another set of headlines to scare even the most resolute of EM investors. Yet it is nearly time for Latin American primary markets to make a comeback, and issuers shouldn't let their plans get derailed.

Another month, another set of headlines to scare even the most resolute of EM investors. Yet it is nearly time for Latin American primary markets to make a comeback, and issuers shouldn't let their plans get derailed.

Developing markets investment bank Exotix believes that Argentine power company Albanesi’s 9.625% 2023s are “money good”, despite a rapid fall in bond prices after the company’s CEO was arrested.

Investor concerns over a growing corruption scandal in Argentina brought a new bout of volatility to Latin American bonds this week, with market participants on both the buy-side and sell-side appearing to have written off the prospect of new issuance in September.

Argentine electricity generation company Albanesi’s bonds found support in secondary markets at the end of the week after a 17 point drop following the arrest of its chief executive.

Despite receiving one of the largest IMF bail-out packages in history, Lat Am bankers are sanguine on the outlook for Argentine DCM activity this year. They say this is as much to do with the broader weakness in emerging markets as it is to do with Argentina’s economic recovery.

Market analysts said that Argentina’s $50bn IMF programme — which one strategist thought to be the largest ever provided by the fund — had surpassed all expectations, with bonds rallying lightly last Friday.

Argentinian president Mauricio Macri’s politically bold but economically astute move to approach the IMF for financing lifted bond prices on Thursday, but markets are continuing to digest a shock period of volatility that has caused drastic reassessments of emerging market debt’s standout story in recent years. Olly West reports.

The last two weeks have been the toughest in recent memory for emerging market bond investors who have seen their assets in local currencies and dollars alike take a hammering amid the collapse in the Argentine peso and Turkish lira.

Following another tough day for Argentine bonds, the country’s economy minister Nicolás Dujovne clarified after market close on Wednesday that the government was seeking a stand-by agreement from the IMF.

Market pressure on Argentina in recent weeks drove President Macri to take what initially felt like a radical step by roping in the IMF. But what first seemed like a horrific déjà vu is actually a sign that things are getting better in the most underperforming EM nation.

The strengthening dollar is wreaking havoc for emerging market bond investors as assets in local currencies and dollars alike take a hammering.