August 19, 2019 / 12:56 PM / 2 months ago

Argentine CDS jump 300 bps after opposition leader says to re-negotiate IMF loan terms

LONDON (Reuters) - The cost of insuring against an Argentine sovereign default rose on Monday after opposition candidate, Alberto Fernandez, said the country would struggle under present conditions to repay a loan to the International Monetary Fund.

Argentine 5-year credit default swaps (CDS) were quoted by IHS Markit at 2,669 basis points (bps), up 319 bps from Friday’s closing level of 2,350 bps. Markit calculations, based on Friday’s closing prices, estimate a 77% probability of a sovereign default within the next five years.

Fernandez, the favourite to win the October elections, said he would seek to renegotiate the repayment terms, according to an interview published on Sunday by the newspaper Clarin.

Argentina signed a stand-by agreement with the IMF in mid-2018 for $57 billion. That deal was overseen by President Mauricio Macri, who was beaten by Fernandez in primary elections on August 11.

Reporting By Tom Arnold; editing by Sujata Rao

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