Message from Klishtina to Bloomberg NewsThe big regional finance news this morning is that Argentina has agreed to pay off its Paris Club debt. The U$6.7Bn approx debt will be paid off using Central bank funds, and has been enacted by Klishtina in a Presidential decree. This is why Argentine banks are zooming this morning, for example the ADRs easily traded in the USA such as Grupo Galicia (GGAL)...
...and Banco Macro (BMA).
What this is really about in solid financial terms is good housekeeping. Argentina has $50Bn hanging round in reserves doing nothing, and it pays about $355m per year in debt servicing on the $6.7Bn Paris Club lump. It's kind of silly not to do this, in fact.
But despite the fact that it's only a small slice of the total debt owed by Argentina, also it sends an important psychological signal to the markets; "You damnfools who think we're going bust...think again." All the chatterers that have recently been snarking about Argentina replaying the 2001/2002 default in the weeks and months to come now have to STFU, at least for a while, and Argentina's country risk therefore directly benefits .
Ironically and deliciously, the lamentable regional coverage from Bloomberg ran a note titled "Kirchners Losing Argentina in Slump Leading To Crisis" this very morning, just minutes before crow was served up on a golden platter. Bon appetit, Drew Benson in Buenos Aires.
As the old saying goes, money talks and BS walks. FWIW, as much as I dislike the present administration, it's always been plain as day that there's no looming financial crisis. Politics is not economics, and gringo journalists who need a decent lesson in how LatAm works will hopefully have learned that little pearl today.
UPDATE: A tall and handsome gentlemen I know has just written and said that according to his Bloomberg terminal I'm totally wrong with that "just minutes before" in the 2nd last paragraph. In fact, Drew Benson's story was filed exactly 666 minutes before the Paris Club debt story broke. A number which is spooky...just plain SPOOKY. PTB, queue here..........
...and Banco Macro (BMA).
What this is really about in solid financial terms is good housekeeping. Argentina has $50Bn hanging round in reserves doing nothing, and it pays about $355m per year in debt servicing on the $6.7Bn Paris Club lump. It's kind of silly not to do this, in fact.But despite the fact that it's only a small slice of the total debt owed by Argentina, also it sends an important psychological signal to the markets; "You damnfools who think we're going bust...think again." All the chatterers that have recently been snarking about Argentina replaying the 2001/2002 default in the weeks and months to come now have to STFU, at least for a while, and Argentina's country risk therefore directly benefits .
Ironically and deliciously, the lamentable regional coverage from Bloomberg ran a note titled "Kirchners Losing Argentina in Slump Leading To Crisis" this very morning, just minutes before crow was served up on a golden platter. Bon appetit, Drew Benson in Buenos Aires.
As the old saying goes, money talks and BS walks. FWIW, as much as I dislike the present administration, it's always been plain as day that there's no looming financial crisis. Politics is not economics, and gringo journalists who need a decent lesson in how LatAm works will hopefully have learned that little pearl today.
UPDATE: A tall and handsome gentlemen I know has just written and said that according to his Bloomberg terminal I'm totally wrong with that "just minutes before" in the 2nd last paragraph. In fact, Drew Benson's story was filed exactly 666 minutes before the Paris Club debt story broke. A number which is spooky...just plain SPOOKY. PTB, queue here..........