In the midst of the electoral campaign, despite the lack of months for the presidential elections, the issue of debt once again raises concerns in the financial market. The oratory of some candidates (mainly from the opposition) is not music for the ears of investors.
Argentina, which was considered a “serial defaulter” by the world, could play again with fire. Although the specific plans are not known, Kirchnerism – with Cristina Fernández at the helm but recently with several definitions left by Alberto Fernández – is the political space that most fuses the idea of a debt restructuring.
Will it be friendly or unilateral? It is not known. But the risk rating agencies, that is, the market players that note the bonds issued by the countries, are on high alert for the possibility that Argentina will again default on the debt.
“It is difficult to comment on what is said in the campaign. We will see what the winner does. But yes, any restructuring of debt with private bondholders is a default. Under our definition and that of ISDA, I don’t know if it’s what they propose or what they have in mind. Clearly, restructuring is making a default, but we’ll see what they do,” said Gabriel Torres, VP and senior credit officer of Moody’s.
Candidate for president, Alberto Fernández, spoke several times of raising some measure of waiting for private creditors. He knows that to extend the deadlines with the International Monetary Fund, he would need to commit to a series of structural reforms that he does not want to face. Nor can the Fund be defaulted. Hence the “adjustment variable” is the holders of private bonds.
Recently, Fernández prepared a document with Sergio Massa in which they commit to work on various issues as a result of the alliance they sealed. In one of them, they talk about debt treatment.
“The situation of violent financial instability, generated by over-indebtedness, should be addressed through broad agreements with creditors, which contemplate the need to guarantee an inclusive growth process as the only resource to meet external and internal commitments” , explains the platform approved by Massa and Fernández.