Argentina: What Are the Requirements For Upgrade to Emerging Markets Status?

Getting back to international bond markets

For a significant period of time, Argentina was unable to borrow from international markets because of dispute with investors. The country had defaulted on its debt obligations in 2001 followed by 2014 as it did not adhere to court orders directing the country to repay its bond holders.

To resolve the deadlock and gain back access to international markets, Argentina decided to pay $4.65 billion in cash to Elliott Management, Bracebridge Capital, and others in March 2016.

Following this, the country raised $19 billion in foreign debt in 2016, issuing bonds after a 15 year gap. It plans to raise another $10 billion this year.

Macroeconomic fundamentals

Inflow of foreign money shows that international investors are responding to reforms undertaken by the country.

While this is a positive sign, potential investors should take into account the macroeconomic picture of the country as well.

Inflation continues to be a worry for the country with consumer prices having risen 40% annually in 2016. The country’s central bank left its key rate unchanged at 24.75% on March 7 citing volatility in inflation rates. The bank also noted that economists’ median expectations for inflation stood at 20.8% for 2017,…