A debt crisis wouldn’t be a debt crisis… | FT Alphaville

A debt crisis wouldn’t be a debt crisis…

…without Argentina.

Right on cue, Argentina’s bonds slumped to a five-month low on Tuesday following speculation that Amado Boudou, the country’s economy minister, could be about to resign.

His departure would delay the country’s plan to revive its fortunes through a multi-billion dollar debt swap and is the latest episode in a series of high-profile political spats.

Clarin, one of the country’s largest newspapers, reported that a fresh row had broken out between Boudou and Guillermo Moreno, the abrasive internal trade secretary, over the handling of government data.

The report sent bonds tumbling as investors feared Boudou could be about to walk.

From Reuters:


Meanwhile (emphasis ours):

Argentina’s yield spreads widened by 23 basis points to 808 basis points over comparable U.S. treasuries, according to the benchmark J.P. Morgan Emerging Market Bond Index.

Argentina’s latest political crisis kicked off back in December when President Cristina Fernández decreed the transfer of $6.5bn of reserves to the government to pay off debt, leading to the resignation of the central bank’s president.

Guillermo Moreno has also become a familiar character in the country’s economic soap opera.

In 2008 he was blamed for the resignation of Martin Lousteau, Argentina’s former economy minister, and as the head of INDEC, Moreno was frequently accused of understating inflation.

He also earned a formidable reputation in the business world thanks to his habit of taking his gun to business meetings, according to Revista Noticias.

In spite of today’s negative reaction, RBS reckons Boudou’s departure might not be the big cliff-hanger the market has made it out to be:

“The initial market reaction is interpreting the rumored departure as a potential delay and risk for policy reversal.  However, our view is that the Finance Ministry has limited influence on the Kirchner Administration.”

They note:

“We have been of the opinion all along that Mr. Boudou is not the real Minister of Finance, as in any other Latam country. He has been more of a Secretary of Finance, with total command over the conduct of the swap reopening, but with limited decision making power in terms of public policies.”

Related links:
Argentina: A profligate president – FT
Tensions rise over Falklands oil exploration – FT