Paula Lugones
08/03/2020 - 22:19
- Clarín.com
- Politics
Although the government and private creditors have not yet made the formal announcement with the details of the agreement reached this Monday, Wall Street experts consulted by Clarín consider that "it is a good way out" that will give Argentina "a certain financial predictability" , although they emphasize the urgent need for a "serious economic plan".
Carlos Abadi, executive director of the financial consulting firm Decision Boundaries, stated that “every agreement is a good agreement. This is consistent with Argentina's ability to pay and not too punitive towards capital markets. "
However, he believes that "it was not the best that Argentina could achieve". "I always believed that the Government's strategy was too risky since it consisted of closing a deal for June (which Argentina announced would be the last month in which it would honor its commitments) and not fall into default. At the time of default, Argentina's position was very vulnerable : given the Fund's statutory prohibition on lending to countries in default unless they are negotiating in good faith with their private creditors, Argentina was exposed to counterproposals that the Bondholders could characterize them as reasonable and ended up having to accept most of these demands. Because of this risk, I always proposed to advance the negotiation with the Fund and then close with the bondholders, ”he explained.
In any case, Abadi believes that “this agreement will give Argentina a certain financial predictability that is necessary to reverse the sign of the capital account and the financial account. However, the clarity is still incomplete because the agreement with the Fund remains ahead. ”
Alex Schober, Latin American analyst at DuckerFrontier, noted that “I thought the previous offer was enough, but the bondholders wanted a little more. The current arrangement, the value of which is the average between the value of the Government's previous offer and the bondholders' counteroffer, is a good way out. An agreement is better than a prolonged default, especially given the current economic context. "
Schober noted that on Wall Street "we will now pay attention to the Government's next steps because there are many economic imbalances that it has to face ." He pointed out, as an example, that by agreement with the bondholders, the gap between the official and unofficial dollars can be reduced (the Central Bank could let the official dollar run). In addition, he stated, “we will have to see an economic plan. My company, DuckerFrontier, expects a GDP drop of -10.9% in 2020, so a recovery plan is key. "
For Diego Ferro, founder of M2M Capital, “it is possible that they will sell the issue of having reached an agreement as spectacular, but in reality the important thing is to have an economic plan. This restructuring was negotiated in the air, without a plan, if I settle with the IMF and with no idea of what is happening with the economy in Argentina. Because closing an agreement when you are in the midst of a quarantine is absurd because you do not know what the total damage will be to the Argentine economy. "
Ferro explains that "from an offer to US $ 35, which was what the government could theoretically pay before quarantine, it goes up to an offer of more than US $ 50 when the economy is destroyed after quarantine."
However, the expert believes that “it is good that an agreement has been reached because the government had made the effort and was desperate to reach it and it is also good that the country is not in default for an aesthetic matter. But will something change in the Argentine economy? No. Until there is a serious economic plan, nothing will change . ”