Stock Market Desk: Argentina’s country risk spread widened over safe-haven U.S. Treasuries on Wednesday as the market braced for an expected nonpayment of $500 million in interest on government bonds that would kick off a 30-day grace period before default is declared.
The country’s segment of JP Morgan’s Emerging Markets Bond Index Plus shot out 109 basis points to 3,726 over U.S. Treasury paper, indicating an increase in payment risk.
With its already weak economy further bloodied by a lockdown against the coronavirus that started on March 20, Argentina is contending with a mountain of unsustainable debt subject to a plan to restructure about $65 billion in sovereign bonds.
The plan drew initial boos from creditors. But the government and bondholders have about three weeks to negotiate a bond revamp deal that would be the latest in a long list of defaults by the crisis-prone South American country.
Wednesday’s payment comes with a 30-day grace period after which, if it remains unpaid, Argentina would default, reviving memories of acrimonious battles with creditors after a nonpayment in 2002 that set off the biggest economic crisis in the country’s history.
