Argentina Investors Poised for Rally After Milei Landslide Win
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Argentina’s dollar bonds soared on Monday as President Javier Milei’s strong showing in legislative elections beat even the most bullish of forecasts, easing investor concern his economic overhaul of the crisis-prone nation would stall.
The nation’s debt jumped across the curve in early trading, with dollar notes due in 2035 up more than 13 cents to trade at a record 70.34 cents on the dollar, according to indicative pricing compiled by Bloomberg. The country’s bonds led gains among emerging-market peers.
With more than 90% of ballots counted, Milei’s party got 41% of the votes, winning 64 seats of the 127 up for grabs in the lower house of Congress and 13 of the 24 open Senate posts, according to data published by local electoral authorities late Sunday. Markets had been forecasting the governing coalition would win about 30% of seats. The peso was already posting gains in the crypto market Sunday as the results were announced.
“The scale of Milei’s victory ranks at the most optimistic end of pre-election expectations,” Alejo Czerwonko, chief investment officer for EM Americas at UBS Global Wealth Management. “His party now holds the political capital needed to accelerate structural reforms.”
The results should also help ease doubts on whether the South American nation will continue to receive crucial support from the US. Prior to the vote, the Trump administration signed a $20 billion swap line with Argentina’s central bank to help stabilize the peso, and was in talks with a group of banks for an additional $20 billion financing package.
Trump had previously signaled that he could withdraw his backing if Milei’s agenda were to be defeated, telling reporters “if he wins we’re staying with him, and if he doesn’t win we’re gone.”
‘Rush’
Fund managers had forecast assets would rally on the news. Christine Reed, emerging market local currency debt portfolio manager at Ninety One in New York, said in an interview dollar bonds should pace the bounce, while adding “the local bond curve should also rally considerably.”
The peso should recover too, since “the market went too long US dollar into the election,” said Matias Montes, a strategist at EMFI Securities. “Everyone is going to rush to close positions.”
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