BUENOS AIRES/NEW YORK—Argentina’s Peronist government has had a wild ride in its first year of government: a sovereign default, mammoth debt restructurings, sliding reserves, a currency crisis and a weak economy battered by COVID-19.
There have been wins and losses since taking office in December last year. Debt deals were struck that allowed the government to revamp some $110 billion in foreign currency bonds and push repayments well into the future. Crunch talks with the International Monetary Fund remain positive.
On the flip-side, weakness in the peso has drained foreign reserves, while the central bank was forced into printing money to bolster the pandemic-hit economy. Exports have been sluggish amid devaluation fears.
Shamaila Khan, New York based head of EM debt strategies at AllianceBernstein said Argentina had a “credibility issue,” but has taken step to get itself back into the global economy despite its ninth sovereign default in May.
“The fact is, the country has really taken care of their debt repayment issues and it’s in a good position to benefit from what we think will be a much better global environment for EM in general and for commodities, starting next year,” she said.
Some investors warn that issues reviving growth could lead to another default before long. The country’s risk index dropped sharply after restructuring, but borrowing costs remains sky-high. Argentine bond prices also remain in default territory.