Argentina Bonds Jump After Opposition Wins Province Primary Vote

Manuela Tobias and Scott Squires
·2 min read
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(Bloomberg) -- Argentina’s overseas bonds climbed Monday after the nation’s opposition coalition pummeled the left-leaning incumbent in a primary gubernatorial election Sunday night.

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Securities due 2030 reversed a three-day slump, gaining almost 1 cent to nearly 34 cents on the dollar after voters in Santa Fe, the nation’s third-biggest province, sided with a gubernatorial candidate aligned with center-right presidential contender Horacio Rodriguez Larreta.

The results signal high disapproval for the ruling Peronist coalition and show voters are angling to install the more business-friendly coalition, known in Spanish as Juntos por el Cambio, after the presidential elections this October.

“The elections in Santa Fe show Juntos por el Cambio could potentially perform better than what polls seem to be showing,” said Pilar Tavella, an economist at Barclays in New York.

Optimism that the nation may reach a long-awaited agreement this week to rework its $44 billion lending program with the International Monetary Fund is also fueling market optimism, Tavella added.

Government officials expect to close a new agreement with IMF staff by Friday to rework the program. The government owes the IMF about $2.6 billion by the end of July or risks running into arrears, although it scraped together a similar-sized payment in June by using, in part, Chinese yuan from a currency swap line with Beijing.

Santa Fe’s primary election results bode well for Larreta, who faces off against coalition rival Patricia Bullrich in an Aug. 13 presidential primary. Larreta’s candidate in Santa Fe, Maximiliano Pullaro, won their coalition’s primary by 11 percentage points over the second-place contender, Carolina Losada, who is loyal to Bullrich’s wing of the coalition.

Other presidential candidates from different parties include current economy minister Sergio Massa and congressman Javier Milei, a libertarian political outsider who says he would dollarize the economy to quell 115% annual inflation.

“To some extent the vote is a ‘victory’ for Larreta over Bullrich,” said Javier Casabal, a fixed income strategist at Adcap in Buenos Aires. “A Larreta versus Massa match-up in October is probably the preferred scenario for the market.”

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