Worlds Largest Drop in Default Risk? It's Argentina

January 7th, 2011
in News, Banking

Argentina MapBloomberg:  Argentina is "full of beans", soy beans that is, and that has led to a great improvement in their credit rating as soy bean and soy bean product prices have surged.

Follow up:

Argentina’s bond risk is dropping the most among governments worldwide this week as a global economic recovery boosts prices of soybeans, the country’s biggest commodity export, and fuels demand for higher-yielding assets.

The cost of protecting Argentine debt against non-payment for five years with credit-default swaps tumbled 41 basis points, or 0.41 percentage point, this week through yesterday to 561, according to data from CMA in New York. Argentina’s swaps fell below contracts for Ireland for the first time last week and are within 37 basis points of Portugal, which Standard & Poor’s rates A-, eight levels above the South America country.

Argentina, the world’s third-largest soybean producer, is benefitting from a 55 percent price increase for the crop in the second half of 2010. The oilseed’s jump to a 29-month high this week and increased risk appetite are attracting investors to Argentine debt, said Siobhan Morden, the head of Latin America strategy at RBS Securities Inc.  Read more at Bloomberg..... 

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