Argentina From Economic Depression to Recession to Resuscitation to Debt RetirementEconomics / Argentina Apr 25, 2010 - 06:44 AM GMT
After nearly a decade of depression, recession and resurrection, Argentina wants to retire its remaining unpaid debt at about 50 cents on the dollar and rejoin world financial markets.
It all goes well, Argentine debt and the peso could be a very good investment.
Chart 1 ARG CDS The cost of insuring debt is stable just above pre 2008 crash levels and the peso is forming a bottom around 25 US cents.
Chart 2 ARG RESERVES stable around 45-50B USD
Chart 3 Dollar bonds due 2033 are yielding 11% and poised to break out
Chart 4 ARS INDU The last time world equity markets were at current levels, the peso was 25% more expensive.
Assuming the weak peso policy has stabilized the currency around 25 US cents, interest differential gains of 10-20% can be realized by purchasing six to twelve month peso forwards. Forwards have no exposure to bond risk. Any peso appreciation would be a windfall.
By Daniel Bruno
Chartered Market Technician
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