Aug. 12 (Bloomberg) -- Former Cabinet Chief Sergio Massa yesterday beat Cristina Fernandez de Kirchner’s leading candidate in a primary to choose contenders for October mid-term congressional elections.
Massa, who heads a group of dissident Peronist Party members, took 35 percent of votes in Buenos Aires, the country’s most populous province, compared with 30 percent for Martin Insaurralde with 97 percent of voting centers counted, according to partial results posted on the Interior Ministry’s website.
“Looking ahead to the mid-term elections, Massa’s support will grow as voters who oppose the government rally behind him,” Federico Thomsen, a Buenos Aires-based economic and political analyst with research company E.F. Thomsen, said in a telephone interview.
Fernandez needs to secure two-thirds majorities in both houses of congress to push through constitutional changes that would allow her to seek a third term in 2015. Confirmation of Massa’s popularity would make him a potential presidential candidate, according to Mariel Fornoni, managing director of pollster Management & Fit.
The election was a “significant blow” for Fernandez and should be seen as positive for investors, wrote Barclays Plc. analysts Sebastian Vargas and Alejandro Grisanti in a report today.
Yields of Argentine government dollar bonds due 2015 dropped 22 basis points, or 0.22 percentage point, to 10.75 percent at 2:23 p.m. in Buenos Aires, the lowest since October, according to data compiled by Bloomberg.
“Analyzing the results, we find people support our fight against insecurity, inflation and taxes that are squeezing workers and retirees,” Massa told a crowd of supporters in Tigre last night. “We offer a path to the future and propose to keep the courts autonomous and respect the constitution to make sure it isn’t modified in any way.”
About 31 million Argentines were obliged by law to vote in the primaries to choose candidates for 127 seats in the lower house and 24 in the senate. Massa and Insaurralde are among those seeking to contest the 35 lower house vacancies for representatives from Buenos Aires province.
Nationwide, Fernandez’s ruling Frente Para la Victoria party secured 26 percent of the total vote with 98 percent of votes counted. Fernandez, whose spending on education, highways and handouts for the poor helped her win re-election in 2011 with 54 percent of votes, is banned by the constitution from seeking a third consecutive term.
The 26 percent represents the worst national election for the coalition since 2003, when Fernandez’s late husband and predecessor Nestor Kirchner took office with 22 percent of the votes, according to political analyst Rosendo Fraga, who runs Nueva Mayoria research firm.
“The ruling party needs to acknowledge that it needs to change its policies as they don’t have people’s support,” Fraga wrote in a statement on his website. “They can’t talk anymore about that 54 percent for her re-election, it has to assume the 26 percent of these primaries.”
Fernandez called on supporters to work harder ahead of the October election. Her party remains the most voted nationwide, she said.
“We’ve always worked hard and will continue to do so,” Fernandez told a crowd of supporters in Buenos Aires last night. “We’re going to intensify our efforts over the next few months.”
In the city of Buenos Aires, where 13 lower house and three senate seats will be contested in October, Fernandez’s candidate Juan Cabandie came in third place with 19 percent of votes, behind an opposition coalition with 35.6 percent and Sergio Bergman of City Mayor Mauricio Macri’s PRO party, who took 28 percent, with almost all votes counted.
Massa was elected mayor of Tigre, a sprawling, riverside municipality on the northern outskirts of the capital, in 2007. The following year, Fernandez chose him to head her cabinet, firing him in 2009 in the wake of the ruling coalition’s losses in mid-term elections. Massa resumed his mayoral duties and was re-elected in 2011.
Massa told business leaders in Buenos Aires on Aug. 7 that Argentina’s isolation from international capital markets has caused it to miss the opportunity to secure cheap financing to develop South America’s second-biggest economy.
Argentina hasn’t sold debt abroad since defaulting on a record $95 billion of debt in 2001. The nation’s average borrowing costs of 13.01 percent, are the highest of 56 emerging market economies, according to JPMorgan Chase & Co.’s EMBI Global index.
The bond market may react positively to the Massa victory if he looks poised to present a strong challenge to the government candidate in 2015 presidential elections, Credit Suisse Group AG analyst Casey Reckman wrote in an Aug. 6 report.
Fernandez said neither she nor her candidates will make promises they can’t keep ahead of the October election like completely resolving crime since the government has never lied to the people.
“Our struggle is like David versus Goliath having to deal with media attacks and giving people answers to their problems on a daily basis,” Fernandez said. “My responsibility is to make the country governable.”
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