Argentina bonds recover after sliding on confusion over Milei's crypto post (updated)

Vontobel Holding AG

18/02/2025 16:23

(Adds quotes, background, paragraphs 5-10)
    By Libby George and Marc Jones
       LONDON, Feb 18 (Reuters) - Argentina's international
bonds recovered most early losses on Tuesday, as investors
shrugged off the risk to President Javier Milei's position after
he was embroiled in a row over a little-known cryptocurrency
that crashed. 
    Late on Friday, Milei recommended the crypto coin $LIBRA in
a post on X, kicking off a brief rally. He later deleted the
post and denied having any link to the cryptocurrency, which
soon plunged.
    The country's fintech chamber said the case could amount to
a "rug pull," a scam in which a coin's backers lure multiple
investors, sending the cryptocurrency's value soaring, then
quickly withdraw their funds.
    Argentina's 2030 dollar-denominated bond fell nearly 2
points as markets reopened on Tuesday after the weekend. But
they recovered roughly half the lost ground to stand at roughly
80 cents on the dollar by 1515 GMT, traders told Reuters. 
    Investors have cheered Milei's austerity crusade since his
2023 election, and have bet the rally could continue even after
some stocks and bonds hit records last year. 
        Any threat to Milei's position or reforms would concern
foreign investors placing cash in the country. But most shrugged
off the opposition's threats to impeach him. 
  
        Bruno Gennari, emerging markets strategist with KNG
Securities International, said the chance of the scandal
escalating into impeachment was "not likely." 
  
        "I think the opposition still has incentives to
cooperate with Milei, as their voters still prefer them over the
alternatives," he said, adding that the scandal had not directly
impacted the economy or most of the population.
  
        Thierry Larose, portfolio manager with Vontobel, also
said that investors for now do not see Milei at risk, and noted
that global U.S. dollar bonds fell 1.5%-2% before recovering.
  
        "But he has certainly spent some political capital, with
the cost potentially surfacing during the midterm election
campaign later this year," Larose said. "Investors will now
focus on tangible milestones."
  

 (Reporting By Libby George and Marc Jones; Editing by David
Gregorio)
 ((Libby.George@thomsonreuters.com; +44 07527 061331; Reuters
Messaging: libby.george@thomsonreuters.com))