Argentine Bonds Hit by Farmer Crisis

Argentine bonds have begun to feel the impact of the latest round of protests from farmers complaining about an increase in the country’s export tax. “This [wave of protests] increases uncertainty on what is going to happen in the very short term and this is why bond spreads are widening,” says Pablo Morra, analyst at Goldman Sachs. Argentine CDS spreads widened by around 20bp [Tuesday] morning, he adds. The current crisis should last only a few days and the government might have to give some concessions to end the strike, the analyst speculates. The administration has, however, already ratified the decision to increase the export tax. “If the strike is prolonged for a long period of time it will lead to output losses, tax revenue losses and export revenue losses so the impact would be negative,” adds Morra.