The indicator prepared by JP Morgan fell by more than 3% this Wednesday, accumulated a drop of 90 points in December and reflected the market's positive reaction to the BCRA's announcements
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In a new sign of market support for the economic course of the Government, Argentina's country risk plunged more than 3% this Wednesday, December 17, and stood at 555 basis points, the lowest level in more than seven years. To find a similar reading, it is necessary to go back to July 31, 2018, when the indicator had closed at 556 units.
The index, prepared by JP Morgan bank, is posting its second consecutive decline, driven by the positive reaction of investors to the recent announcements by the Central Bank, in particular the new modality of adjustment of the exchange rate bands and the program for purchasing and accumulating reserves. So far in December, the indicator has already fallen by 90 points, a significant correction that reinforces the shift in expectations under the current administration.
El Riesgo País se ubica en los 555 puntos, el mas bajo desde 2018.
The drop was publicly celebrated by members of the economic team. "Ladies and gentlemen, we are at the lowest levels of country risk since August 2018", emphasized Felipe Núñez, adviser to the Economy Minister, through his account on the social network X.
The decline in country risk coincided with a new rise in sovereign bonds in dollars, which this Wednesday posted gains of more than 1%. Nevertheless, market participants pointed out that there are still challenges ahead. "All bonds under foreign law offer single-digit yields, with country risk in the area of 550 points, the minimum of Milei's administration. Despite the optimism, it remains to be defined how the upcoming January maturities will be met", warned Milo Farro, analyst at Rava Bursátil.
In this context, Economy Minister Luis Caputo stated this Tuesday that the Government is evaluating all available alternatives to meet short-term financial commitments, which exceed US$ 4.2 billion. Among the options, he mentioned the use of swaps with China and the United States, bank loans, and operations in the capital market.
From within the ruling coalition, officials stress that the drop in country risk is a key signal, since it brings Argentina closer to the possibility of once again issuing debt in the international market. Access to external financing would allow the Central Bank to accumulate the reserves it has acquired, instead of allocating them to the payment of maturities, thereby reinforcing macroeconomic stability.
El ministro Luis Caputo.
Although Caputo has reiterated on several occasions that he seeks to reduce dependence on Wall Street and strengthen the local market, Government officials admit that a bond issuance during 2026 is a concrete possibility. In that regard, the International Monetary Fund itself acknowledged that Argentina will have to refinance its maturities in the market.
Financial analysts estimate that if JP Morgan's indicator falls to the area of 450 points, the country could once again place bonds abroad at rates below 10%. To move forward on that path, however, Caputo will have to obtain Congress's approval, which is why the first recent issuance in foreign currency was carried out under local law, with the aim of avoiding delays and speeding up the arrival of funds.
