Argentinas dollar bonds plummet, country risk rises due to war in Middle East

Argentine assets continued to suffer the impact of the war in the Middle East on Tuesday, as sovereign dollar-denominated bonds tumbled on Wall Street, pushing country risk to its highest level since mid-December. Markets came under heavy pressure following renewed cross-border attacks involving Iran, Israel, and the United States. The conflict has spread to several Arab nations and threatens energy supplies due to the closure of the Strait of Hormuz.  Major European stock exchanges extended their downward trend, Wall Street fell sharply, and oil prices surged once again. Against this backdrop, the S&P Merval index dropped more than 2% on Tuesday, while Argentine companies shares trading through American Depositary Receipts (ADRs) plunged in New York by as much as 7%. Country risk hits yearly high In line with investors flight from riskier assets, Argentinas dollar sovereign bonds posted steep losses. The Bonar AL35 fell 1.8%, while the Global GD35 dropped 1.4%. The situation caused country risk to jump 4.8% and reach 594 basis points, its highest level since mid-December, when it briefly fell below the 600-point mark. While the war brings additional complications for Argentina’s country risk a crucial factor for the government’s ability to regain access to international debt markets the indicator had already begun to stall in recent months. The government has been unable to consistently stay under 500 basis points. Argentine stocks in the red Meanwhile, the S&P Merval index of the Buenos Aires stock exchange slipped 0.8%. Measured in dollars, the benchmark fell 1.6%, reaching its lowest level since October 27. At the same time, shares of Argentine companies trading in New York plunged, with energy company Edenor leading the pack with a 6.9% drop. The next two in line were development and construction fim IRSA down 6.5% and banking conglomerate Grupo Supervielle, with 6%. Originally published in Ambito.com