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Borrowers: Wait for the rate

Borrowers: Borrowers start to play a strategic game

As well as extending the maturity of its debt, diversifying the international investor base and developing its domestic treasury markets, the economy ministry has another important item on its agenda over the next two years - to press Argentina's case for an investment grade credit rating.

The ministry recognizes that, however efficient it is in accessing new markets and widening the investor base, the critical issue on funding costs will be the jump from double-B to triple-B, which typically allows a borrower to shave 100 basis points and more off the spread on its new issues.

Argentina's case for an upgrade is a strong one, since the country has low inflation, solid GDP growth, and a small budget deficit. However, its Achilles heel, as far as the credit analysts are concerned, is its poor showing in debt service costs as a percentage of total exports, where it flunks the test with a high figure of 45%.

But in spite of this one unfavourable number, under-secretary of finance Miguel Kiguel says Argentina compares favourably to other triple-B sovereign credits around the world.

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