Argentina's Country Risk Hits Lowest Since April 2018 After S&P Upgrade

Argentina's country risk indicator has reached a new low for the current administration, signaling increased market confidence. On Friday, the risk premium fell by 10 units to 433 basis points, a level not seen since April 2018 during the presidency of Mauricio Macri. This significant drop is largely a response to a recent upgrade in Argentina's sovereign debt rating by S&P Global Ratings.

S&P elevated Argentina's rating from CCC+ to B-, following a similar positive assessment from Fitch. This improved creditworthiness has bolstered the performance of Argentine sovereign bonds. The JP Morgan-calculated country risk indicator had already seen a substantial decline of approximately 60 units on Thursday, reaching 443 points, as sovereign bonds demonstrated strong gains. Specific bonds, such as the AL35D and GD46D, have experienced notable increases in value.

Despite the positive trend in bonds and the reduced country risk, the performance of Argentine stocks, particularly those trading as ADRs on Wall Street, has been mixed, with most showing declines. Major indices like Mercado Libre and Cresud are down, while Ternium and Tenaris have seen gains. The Merval index in Buenos Aires also experienced a slight decrease. In the currency market, the official wholesale dollar rate remained unchanged, while retail and financial dollar rates showed minor fluctuations but remained relatively stable.