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Argentina
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Politics

Argentine Eurobonds Tumble After Macri Routed in Shock Vote

  • Argentine Eurobonds Tumble After Macri Routed in Shock Vote
    Argentina's Macri faces setback as Fernandez sees primary win. With more than half of votes counted, opposition receives 47 percent against incumbent's 32 percent. Argentine Eurobonds Tumble After Macri Routed in Shock Vote
Region:
Argentina
Category:
Politics
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Argentina's Macri faces setback as Fernandez sees primary win. With more than half of votes counted, opposition receives 47 percent against incumbent's 32 percent. Argentina’s international bonds tumbled in London trading after a populist opposition candidate routed President Mauricio Macri in a shock primary election result.

The nation’s euro-denominated notes due in 2028 collapsed, sending the yield up more than one percentage point to 11.89%, the highest since the notes were sold, according to data compiled by Bloomberg. Opposition candidate Alberto Fernandez and his running mate, former President Cristina Fernandez de Kirchner, won by a much wider-than-expected margin over Macri, spooking investors who were already trimming exposure to Argentine assets in the run-up to the Oct. 27 presidential election.

Amherst Pierpont Securities warned of “panic” when local markets open. Others weighed the chances that the central bank will intervene to support the currency, which is already the worst-performer in emerging markets this year versus the dollar with a 17% loss.

“For markets, this is very negative,” said Carolina Gialdi, a senior fixed-income strategist at BTG in Buenos Aires. “The market will likely price this as it is a done deal that Alberto Fernandez won.”

The peso could lose 25% of its value on Monday and bonds may slump about 20% on the results, according to BTG Pactual Argentina. That would be a sharp turnaround from Friday, when bonds and locally traded shares gained amid optimism about Macri’s chances.

Traders fear the primaries are a signal the country may look to return to policies such as currency and capital controls, steering away from Macri’s more market-friendly positions.

In a press conference Sunday evening, Macri said he had “a bad election,” and that his coalition would work to change the trend. The president declined to say if he’ll announce special measures to calm markets or boost the country’s economy ahead of the first round vote.

Argentina’s 100-year dollar bonds fell, propelling the yield 87 basis points higher to 10.44% at 10:08 a.m. in London.

Bloomberg