Argentina´s Economic Outlook 4Q 2012

Debt issues took center stage in recent months and were dominated by two events:
Chaco was forced to pesify when the Central Bank refused to sell dollars to service its local dollar debt raising concerns that the sovereign bonds issued under domestic law could follow a similar path. Those concerns have now largely receded
Argentina was on the verge of a new default after the New York court of appeals ratified judge Griesa’s ruling that would have forced Argentina to pay the holdouts jointly with the hold-ins (the bondholders that accepted the exchange). The decision is now on stay till February 27th awaiting the Court of Appeals final ruling, though there is a good chance that Argentina will end up unscathed and the debt will continue to be serviced as before

The Argentina credit risk, measured by the five years credit default swap, reached 3500 bps and is now at 1500 bps, twice the level of Venezuela. At these interest rates Argentina has no access to the international financial markets, and is likely to lose some commercial credit lines, which will undoubtedly affect growth next year