Argentina Bonds: 30% Yield Is ‘Most Attractive’ In Emerging Markets?

Source: Barrons
By: Dimitra DeFotis

Argentina’s soccer star and alleged tax dodger Lionel Messi got all the headlines Wednesday, but there’s a lot more reading to do about Argentina after its star performance in the international debt market earlier this year.

With Argentina’s defaulted debt case resolved, what’s next? Argentina’s local and international debt markets are “at the beginning of what appears to be a transformational journey,” write Morgan Stanley strategists Gordian Kemen, Aaron Gifford, Dara Blume and Simon Waever, along with Economist Fernando Sedano.

The local bond market is offering nominal yields of around 30%, inflation is near a peak and reform momentum is positive, they write. After the new government took office in December 2015, a new free-floating currency regime fueled depreciation in the Argentine peso (ARS). The administration also is seeking to remove capital constraints and lower inflation.


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