Argentina’s Dollar Bonds Tumble After IMF Threatens Censure
Argentine government bonds tumbled the most in three months after the International Monetary Fund said the country is on track to becoming the first nation ever censured for reporting inaccurate economic data.
The extra yield investors demand to own Argentine debt instead of U.S. Treasuries rose 24 basis points, or 0.24 percentage point, to 871 basis points at 4:37 p.m. in New York, according to JPMorgan Chase & Co.’s EMBI Global index. Dollar- denominated bonds due in 2017 plunged 1.76 cents to 97.93 cents on the dollar for the biggest loss since June 11.
The IMF’s board of directors, meeting yesterday in Washington, decided to give the country until Dec. 17 to respond to concern about the quality of its official data, according to a statement today. If the deadline is missed, the board can issue a declaration of censure, which means sanctions may be applied if the concerns aren’t addressed.
“Argentina is now starting to crack,” Siobhan Morden, the head of Latin American fixed-income strategy at Jefferies Group Inc., said in a telephone interview from New York. “Any official sanctions are mostly symbolic, but it’s a reminder that policy mismanagement is a key concern.”
Inflation data for South America’s second-biggest economy has been questioned since 2007, when former President Nestor Kirchner began replacing personnel at the national statistics agency in a bid to “improve operations.”
Argentina’s credit-rating outlook was revised to negative from stable yesterday by Moody’s Investors Service Inc., which said the lack of reliable statistics “make it extremely difficult to know with certainty Argentina’s real economic conditions, raising questions about the country’s ability to manage adverse shocks.”
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