Argentina's country risk falls to 500 points amid market rebound

Argentina's country risk index fell for a second consecutive day on Monday, returning to the 500-basis-point level after a volatile August. The JP Morgan indicator dropped seven points to 500, after touching 499 earlier, while sovereign bonds Bonares and Globales rose an average of 0.2% Source: lavozar. This follows a peak of 535 points last week and a near 12% drop in the S&P Merval in dollar terms during August Source: infobae.

Market dynamics

The recent correction has hit Argentine assets harder than regional peers, with analysts noting a disconnect between the country risk and equities. "The daily movement of the country risk did not accompany that of the equity market," said Tomás Bazzani of MM Investments, citing August 11 when the indicator was unchanged while the Merval fell nearly 5% Source: infobae. Regional spreads moved modestly: Brazil added 7 basis points, while Mexico and Chile compressed 2 each Source: lavozar.

External factors

US Treasury yields have added pressure. The 10-year yield stood at 4.71%, while the 30-year closed at 5.27% on August 21 Source: lavozar. Econométrica warned that higher US rates raise the floor for emerging market financing, implying Argentina would need to pay about 9.2% for 10-year dollar debt Source: infobae.

Political and fiscal context

Analysts attribute some weakness to pre-election jitters ahead of the 2027 presidential race, where Javier Milei seeks re-election Source: larepublicaco. Moody's, however, said current reforms have shifted from a cyclical adjustment to a more durable improvement in the sovereign credit profile Source: clarin. Despite leading the region in fiscal surplus, Argentina still has the highest country risk, a paradox explained by scarce dollar reserves and a history of defaults Source: Clarín.