Mon. Apr 22nd, 2019

After touching its minimum in three months, the country risk rises again

When it seemed that country risk was approaching 600 points, after a string of constant falls, the international situation slowed down and made it return to levels closer to 700 points.

The index prepared by JP Morgan, which measures how much more than the United States should pay the country to borrow, ended 2018 at 814 basis points. That is, Argentina had to pay rates of around 10.64% (those of 8.14% plus 2.5% of the rate of the Federal Reserve of American States) to borrow in the market.

But during this year, this index had a continuous decline that was cut on Tuesday, when it hit 633 basis points, something that was not achieved since the beginning of November last year. This means that during 2019, the country risk had been reduced by 23% until Tuesday. However, from that floor advanced 35 points and this Friday it reaches 673.

The movement of country risk originates in the price of the bonds. If its price falls, the yield rises and the rate of Argentina rises. During 2019, the values ​​of the bonds in dollars and also that of the shares rose. So far this year, the 2020, 2024 and 2037 Bonars had an increase in their price of 3.6%, 7.2% and 14.1%. For its part, the DICA rose by 16.2%. But this gain was cut in the last two wheels around 1.5%.

The impact was also suffered by local actions, both those listed in Argentina and the ADRs on Wall Street. On Tuesday the Merval had reached the maximum of the year when it closed at 37,471 points, which represented a rise of 23%. The Argentine titles in the United States averaged gains of around 16%. But in the last two days, the Merval yielded 1,519 points, which means 4% of the accumulated increase until Tuesday. For their part, the ADRs lost an average of 2% in the last two days.

For economists, this is an international effect. Federico Furiase of the EcoGo consultancy indicated that it is a “global contagion” and that it is in line with the fall in the price of shares on Wall Street.