Falling bond prices. Speculation over a currency devaluation. Locals rushing to the bank to buy dollars. There’s a horrible sense of déjà vu about Argentina as some investors believe the country could default on its debt for the second time in less than a decade.
One banker reckons the market is now pricing in a 35% probability of a default on hard-currency debt. Argentina’s bond prices have lost one-fifth of their value since president Cristina Fernández de Kirchner took office in December. The sovereign’s risk premium is at its highest in three years, according to Bloomberg: Argentina’s five-year CDS is trading at 618 basis points over swaps; its five-year dollar debt...
