Argentina has Funds, Ecuador to be Pariah: Panel

An Argentine default is unlikely, though if it does happen the sovereign would still face easier eventual reacceptance from lenders than Ecuador, say investors and analysts. Speaking on an EMTA panel in New York last week, Gunter Heiland, who helps manage $10bn in EM for JPMorgan Asset Management explains that Argentina has enough cash to make it through the near term. He and others on the panel note that Argentine past defaults were due to a true inability to pay. Ecuador’s recent defaults, simply based on unwillingness, should exclude them from access to funds for a long time. “They [Ecuador] need us a lot more than we need them,” says Mike Gagliardi, senior portfolio manager at HSBC Halbis, noting that he does not anticipate an Argentine default any time soon. Gagliardi also notes that he likes the trade of shorting US Treasuries and buying any Argentine debt available at around 10 cents on the dollar. The 2 countries must hope a recovery comes before political unrest. Meanwhile, Nicolas Eyzaguirre, Western hemisphere head for the IMF, says the 2 countries and Venezuela will have to see whether a lack of access to international funds or a recovery in commodity prices happens first. “It will be a close call, and some won’t make it,” he adds.