Argentina’s bonds crumble as president takes oath in new cabinet

(Bloomberg) – Argentine dollar bonds and U.S.-traded stocks fell on Monday, as President Alberto Fernandez was sworn in to new ministers and weathered a week-long political crisis.

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The country’s $ 10.5 billion bonds due 2041 slipped 1.4 cents to 36.8 cents on the dollar, while the unofficial exchange rate for the peso, known as the blue chip swap, s ‘is weakened by 1.5% to 184 pesos to the dollar. U.S.-traded stocks also fell 13%, with the local benchmark posting the worst performing among the Americas indexes amid a global sell-off.

“We will take action to respond to voters who have been affected by the pandemic,” Fernandez said during Monday’s swearing-in ceremony from the presidential palace in Buenos Aires. “We are already working on it. I call on our supporters to remain united and to reverse the results of last Sunday.

The cabinet reshuffle, announced Friday night, is part of a move to try to end a political crisis that has devoured the ruling coalition following a bigger than expected defeat in the September 12 primary elections. With the government weakened, the vote results cast uncertainty over the political direction Fernandez will take in the final two years of his tenure and increase the chances that he will rely on populist economic measures to win votes before the elections. mid-November terms, according to Bloomberg Economics.

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“Without access to international capital markets, the chances that Argentina will increase its dependence on currency issuance to finance a large public deficit and on unorthodox measures such as price and export controls such as tool to curb inflation have increased. “

– Adriana Dupita, Bloomberg Economics

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Fernandez announced the replacement of five ministers and his chief press adviser on Friday, after Vice President Cristina Fernandez de Kirchner publicly blamed him for not reacting quickly enough to the election results. The new officials include Tucuman governor Juan Manzur, who will replace Santiago Cafiero as chief of staff, and Anibal Fernandez, former chief of staff under Kirchner, as security minister. Cafiero became Minister of Foreign Affairs.

In a presidential decree issued on Saturday, the government also said that $ 4.3 billion in special drawing rights granted by the IMF last month could be used by the central bank to expand the issuance of pesos and fund spending on the Treasure.

Among the other new appointments:

  • Julian Dominguez as Minister of Agriculture, Livestock and Fisheries

  • Jaime Perzyck as Minister of Education

  • Daniel Filmus as Minister of Science and Technology

  • Juan Ross as communication and press attaché

(Update prices in second paragraph and add quote from Fernandez in third paragraph)

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