Disappearing Dollars Compound Default Threat: Argentina Credit
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Argentina’s cash hoard is falling at the fastest pace since 2006, depriving the government of the dollars its needs to pay bondholders as depositors rush to yank money from their savings.
Central bank reserves fell $1.6 billion this year to a five-year low of $41.7 billion as investors await a U.S. court ruling on whether the nation has to pay $1.3 billion to holdout creditors left over from its 2001 default. The extra yield investors demand to hold Argentine debt instead of U.S Treasuries jumped 2.66 percentage points to 12.57 percentage points this year, according to JPMorgan Chase & Co. That’s more than six times the premium that Brazil and Mexico pay.