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Yahoo
6 days ago
- Business
- Yahoo
Analysis-Argentina takes baby step toward financial order with pricey $1 billion debt auction
By Rodrigo Campos, Walter Bianchi and Jorge Otaola NEW YORK/BUENOS AIRES (Reuters) -Argentina's first major bond sale in seven years, a $1 billion offering with payments in pesos, is a clear sign that global investors are regaining their faith in a country recently mired in triple-digit inflation. But the nearly 30% yield, higher than many expected, showed a high level of apprehension remains. President Javier Milei needs to prove to Argentines voting in October, the International Monetary Fund and foreign investors that the economic recovery will continue. Annual inflation has fallen to near 50% from over 270% a year ago. He has convinced the IMF to lend Argentina $20 billion and slashed government spending without losing much popularity, even though nearly 40% of Argentines live below the poverty line. Argentina owes around $300 billion, about $60 billion of which is in dollar-denominated international bonds. A return to dollar-denominated financing in global capital markets is embedded in the IMF program and is sorely needed to cement the recent recovery. This week's offering is "an important milestone on the path to refinancing future dollar commitments," said economist Gustavo Ber, head of Buenos Aires-based Estudio Ber. BTG Pactual called it a "savvy move" with the same outcome as the central bank buying dollars with pesos, without distorting the foreign currency market. The government said late on Wednesday that demand for the 5-year notes was about 1.7 times the $1 billion cap. The 29.5% yield exceeded initial expectations for about 25% and investors have the option to sell back the bonds after two years. Markets on Thursday signaled partial support, when prices for Argentina's dollar bonds issued under foreign or local laws rose marginally. Auctions like this could be replicated but other steps are crucial, said Armando Armenta, senior economist at AllianceBernstein. "It would be better to see more foreign direct inflows and, more importantly, the central bank purchasing reserves to meet the net international reserve accumulation targets," Armenta said. "This would open the door for Argentina to access the dollar sovereign debt market early next year." PESO DEBT On Thursday, peso-denominated debt prices fell and the 10-year local note yield rose, roughly to 27% from 26%. "These rates in pesos are very high, considering their expectations of inflation falling towards 10% in the next two years," said Clyde Wardle, senior emerging markets FX strategist at HSBC, of the yield paid this week. If the current 47% inflation keeps falling sharply, those rates will turn out to be very high and raise the risk of pushing the government to print pesos to pay bondholders, he said. The new offering's yield was well above the expectations of local brokerage Puente, which noted that it "does not indicate strong conviction regarding the future evolution and sustainability of the (currency exchange)." The peso has fallen about 9% to the dollar since capital controls were loosened in mid-April. Argentina has promised the IMF to add $4.4 billion to its net reserves by mid-June. Those reserves were in the red in December and analysts doubt the June objective will be met. The new bond shows investor limits for now, HSBC's Wardle said. "It is unlikely Argentina could find an affordable dollar-denominated issuance rate that attracts foreign investor interest. There is still too much uncertainty about growth." Sign in to access your portfolio
The Star
19-05-2025
- Business
- The Star
Argentina markets bask in Milei's local election win glow
Argentina's President Javier Milei and his sister Karina Milei embrace onstage at the La Libertad Avanza party headquarters on the day of the legislative elections of the city of Buenos Aires, Argentina, May 18, 2025. REUTERS/Tomas Cuesta BUENOS AIRES (Reuters) -Argentina's markets enjoyed the glow on Monday of a mood-boosting local election win by the party of investor-friendly libertarian President Javier Milei, which analysts said put him in good stead ahead of more important ballots later this year. Milei's party won the most votes in legislative elections in wealthy capital Buenos Aires, beating pollsters' forecasts. The win gives Milei just a few more seats in the city's legislature, but is symbolic of his rising fortunes. "The bulk of the support was all to do with Milei," said Buenos Aires-based political consultant Shila Vilker with Trespuntozero, adding it was a "resounding win" for Milei's brash brand of austerity and deregulation. "It's a confirmation of the course they're on." While Milei is divisive, he has kept voters on his side by bringing down what was triple-digit inflation via tough spending cuts and reducing monetary emissions, moves that have won him plaudits from investors and the International Monetary Fund. The latest vote suggests his political footing remains firm, which markets have cheered - even if the real-life impact of the vote is limited, with his party still holding a minority in the city's legislature after the victory. On Monday, bonds edged up around half a percent, while the S&P Merval stock index was up nearly 2%. "Milei's list wasn't expected to come first, and that has two implications," said Graham Stock, emerging markets strategist at RBC Global Asset Management, adding it gave Milei leverage with his more moderate conservative allies. "It suggests that they're going to do better than expected in the midterms in October, but even before that, it creates more momentum behind a deal (with center-right party PRO)." Argentina will renew half of the seats in the lower Chamber of Deputies and a third of those in the Senate in the midterm vote. Milei, an economist and acid-tongued former pundit, came to office in December 2023 after a shock election win. The country still faces a major challenge to build up depleted foreign currency reserves, which it needs to hit targets under a new $20 billion IMF deal, while the recent lifting of capital controls has made the peso more volatile. And not everyone was convinced that it was a win for Milei, with voters split - and many not turning up at all. "My interpretation is that no political party won," said Buenos Aires lawyer Juan Pablo Mares, citing one of the lowest-ever voter turnouts with many people apathetic and struggling under still-high inflation and cuts to public services. "If the political leaders don't look at that, read it, and learn from it, they will continue to be divorced from the reality we all face." (Reporting by Walter Bianchi and Juan Bustamante; Additional reporting by Rodrigo Campos; Writing by Adam Jourdan; Editing by Andrea Ricci)
Yahoo
19-05-2025
- Business
- Yahoo
Argentina markets bask in Milei's local election win glow
By Walter Bianchi and Juan Carlos Bustamante BUENOS AIRES (Reuters) -Argentina's markets enjoyed the glow on Monday of a mood-boosting local election win by the party of investor-friendly libertarian President Javier Milei, which analysts said put him in good stead ahead of more important ballots later this year. Milei's party won the most votes in legislative elections in wealthy capital Buenos Aires, beating pollsters' forecasts. The win gives Milei just a few more seats in the city's legislature, but is symbolic of his rising fortunes. "The bulk of the support was all to do with Milei," said Buenos Aires-based political consultant Shila Vilker with Trespuntozero, adding it was a "resounding win" for Milei's brash brand of austerity and deregulation. "It's a confirmation of the course they're on." While Milei is divisive, he has kept voters on his side by bringing down what was triple-digit inflation via tough spending cuts and reducing monetary emissions, moves that have won him plaudits from investors and the International Monetary Fund. The latest vote suggests his political footing remains firm, which markets have cheered - even if the real-life impact of the vote is limited, with his party still holding a minority in the city's legislature after the victory. On Monday, bonds edged up around half a percent, while the S&P Merval stock index was up nearly 2%. "Milei's list wasn't expected to come first, and that has two implications," said Graham Stock, emerging markets strategist at RBC Global Asset Management, adding it gave Milei leverage with his more moderate conservative allies. "It suggests that they're going to do better than expected in the midterms in October, but even before that, it creates more momentum behind a deal (with center-right party PRO)." Argentina will renew half of the seats in the lower Chamber of Deputies and a third of those in the Senate in the midterm vote. Milei, an economist and acid-tongued former pundit, came to office in December 2023 after a shock election win. The country still faces a major challenge to build up depleted foreign currency reserves, which it needs to hit targets under a new $20 billion IMF deal, while the recent lifting of capital controls has made the peso more volatile. And not everyone was convinced that it was a win for Milei, with voters split - and many not turning up at all. "My interpretation is that no political party won," said Buenos Aires lawyer Juan Pablo Mares, citing one of the lowest-ever voter turnouts with many people apathetic and struggling under still-high inflation and cuts to public services. "If the political leaders don't look at that, read it, and learn from it, they will continue to be divorced from the reality we all face."
Straits Times
19-05-2025
- Business
- Straits Times
Argentina markets bask in Milei's local election win glow
Argentina's President Javier Milei speaks to the media as General Secretary of the Presidency and sister of the president, Karina Milei looks on on the day they vote in the legislative elections of the city of Buenos Aires, Argentina, May 18, 2025. REUTERS/Tomas Cuesta Argentina's President Javier Milei and his sister Karina Milei embrace onstage at the La Libertad Avanza party headquarters on the day of the legislative elections of the city of Buenos Aires, Argentina, May 18, 2025. REUTERS/Tomas Cuesta Argentina's President Javier Milei speaks to the media as General Secretary of the Presidency and sister of the president, Karina Milei looks on on the day they vote in the legislative elections of the city of Buenos Aires, Argentina, May 18, 2025. REUTERS/Tomas Cuesta Argentina's President Javier Milei and his sister Karina Milei embrace onstage at the La Libertad Avanza party headquarters on the day of the legislative elections of the city of Buenos Aires, Argentina, May 18, 2025. REUTERS/Tomas Cuesta BUENOS AIRES - Argentina's markets enjoyed the glow on Monday of a mood-boosting local election win by the party of investor-friendly libertarian President Javier Milei, which analysts said put him in good stead ahead of more important ballots later this year. Milei's party won the most votes in legislative elections in wealthy capital Buenos Aires, beating pollsters' forecasts. The win gives Milei just a few more seats in the city's legislature, but is symbolic of his rising fortunes. "The bulk of the support was all to do with Milei," said Buenos Aires-based political consultant Shila Vilker with Trespuntozero, adding it was a "resounding win" for Milei's brash brand of austerity and deregulation. "It's a confirmation of the course they're on." While Milei is divisive, he has kept voters on his side by bringing down what was triple-digit inflation via tough spending cuts and reducing monetary emissions, moves that have won him plaudits from investors and the International Monetary Fund. The latest vote suggests his political footing remains firm, which markets have cheered - even if the real-life impact of the vote is limited, with his party still holding a minority in the city's legislature after the victory. On Monday, bonds edged up around half a percent, while the S&P Merval stock index was up nearly 2%. "Milei's list wasn't expected to come first, and that has two implications," said Graham Stock, emerging markets strategist at RBC Global Asset Management, adding it gave Milei leverage with his more moderate conservative allies. "It suggests that they're going to do better than expected in the midterms in October, but even before that, it creates more momentum behind a deal (with center-right party PRO)." Argentina will renew half of the seats in the lower Chamber of Deputies and a third of those in the Senate in the midterm vote. Milei, an economist and acid-tongued former pundit, came to office in December 2023 after a shock election win. The country still faces a major challenge to build up depleted foreign currency reserves, which it needs to hit targets under a new $20 billion IMF deal, while the recent lifting of capital controls has made the peso more volatile. And not everyone was convinced that it was a win for Milei, with voters split - and many not turning up at all. "My interpretation is that no political party won," said Buenos Aires lawyer Juan Pablo Mares, citing one of the lowest-ever voter turnouts with many people apathetic and struggling under still-high inflation and cuts to public services. "If the political leaders don't look at that, read it, and learn from it, they will continue to be divorced from the reality we all face." REUTERS Join ST's Telegram channel and get the latest breaking news delivered to you.
Yahoo
18-05-2025
- Politics
- Yahoo
Argentina votes in local elections that will test President Milei's support
BUENOS AIRES, Argentina (AP) — Votes were being cast across Buenos Aires on Sunday in local elections that will test Argentina's President Javier Milei's political strength as he seeks to steer mainstream conservatives toward his radical libertarian platform. The election results could boost Milei's La Libertad Avanza party, or LLA, in crucial national midterms later this year. Some 2.5 million people are eligible to vote in Sunday's election, in which half of the 60 legislative seats are up for grabs. A former TV pundit known for his angry rants against Argentina's political class, Milei founded LLA just four years ago, drawing a motley crew of political novices into his anti-establishment agenda. Seeking to take a 'chainsaw' to state spending with just a tiny minority in Congress over his past 1 1/2-year in office — his party holds just 15% of seats in the lower house and 10% in the Senate — Milei has been compelled to compromise with former President Mauricio Macri, the scion of a wealthy family and the face of Argentina's conservative political establishment. That uneasy alliance has faltered in recent months. The two have clashed over Milei's effort to install a judge embroiled in corruption scandals on the Supreme Court, among other things. In Macri's stronghold of Buenos Aires, where his PRO (Republican Proposal) party has governed uninterrupted since 2007, Milei appears set on crushing his erstwhile partner altogether, analysts say. 'The government needs to claim dominance and the leadership over the whole spectrum of the center-right,' said Juan Cruz Díaz, managing director of Buenos Aires-based political consultancy Cefeidas Group. At his closing campaign rally last week, Milei attacked Macri's party in an expletive-sprinkled rant. 'I'm not going to waste time describing all the inconsistencies of the failed (PRO) party because they're fighting for fourth place,' he told supporters. Wiping out PRO in Buenos Aires would signal a major shift in Argentine politics — one already playing out in the United States, Europe and around the world as increasingly right-wing factions push their way into the mainstream and drown out more moderate voices. It would also cement Milei's party as the main alternative to the country's left-wing populist Peronist faction, which has governed economically troubled Argentina for much of the past two decades. 'If Milei wins in the capital, it will have a very strong symbolic impact,' said Orlando D'Adamo, director of the Center for Public Opinion at Buenos Aires' University of Belgrano. 'If PRO wins, it would maintain Macri's power as a valuable partner, boost his brand and put him on equal footing with La Libertad Avanza.' Milei has chosen a prominent figure — his spokesperson Manuel Adorni — to head his list of candidates. He put his sister and closest advisor, Karina Milei, on the job as a campaign strategist. Huge banners declaring 'Adorni is Milei' blanket the city. 'It has turned into a crucial battle for the political leadership,' said Ignacio Labaqui, a senior analyst at research group Medley Global Advisors. Macri, for his part, has campaigned hard for his top candidate, Silvia Lospennato. In recent appearances, he has criticized Milei for what he sees as a bellicose approach and disregard for traditional Argentine institutions. 'Putting the economy in order is not enough. We must strengthen institutions, be predictable and regain respect for one another,' Macri told supporters. Just two years ago, Macri was key to Milei's landslide electoral victory. His center-right supplied Milei's new government with key ministers, brought him a conservative base and helped him secure the support of critical political brokers to help pass his radical agenda through an otherwise hostile Congress. ___ Associated Press writer Debora Rey in Buenos Aires, Argentina, contributed to this report.
