Argentina Weekly Report

Argentina’s 2019′ Forecast

December 31, 2018BancTrust & Co. Research Team
  • 2019’ political dynamic will define Argentina’s future
    • CFK’s plans so far
    • Latest survey
    • Macri’s real possibilities
  • Opening with macroeconomic variables under control
    • Monetary and Fiscal policy are the fight flags
    • No rest in the battle against inflation
    • GDP: A collateral effect
  • Decisions to target country risk
    • Threads from the outside
    • Argentina’s appealing to investors
    • Argentina’s current curve

Argentina has just finished a year of unveiling its long dated structural deficiencies that needed more than a gradualist approach. All our expectations for 2018, as well as the market’s feeling, were destroyed in the middle of the 2Q18. The necessity to call for help from the IMF set the severity of the situation, and after receiving the biggest bailout approval in history (USD57.1bn), the agreement with the fund governed 2H18 and will definitely rule 2019.

Given the experienced factors of 2018, we would set our perspectives on a more conservative approach and will divide them in the three factors that for us, will define de mid-term perspectives on Argentina: 2019 elections, economic variables and country risk.

2019 political dynamic will define Argentina’s future

As it is widely known, 2019 is the year that Macri will try to win reelection, and our perception over Macri is simple: He is not the preferred candidate.

Macri has shown a lack of reality when it comes to evaluating Argentina’s problems, nonetheless, he is the best option available in order to avoid the return to Peronism, specifically, the return of Cristina Fernandez de Kirchner (CFK). Thus, we believe it is of great importance to define CFK’s plans so far, as this will in turn define Macri’s strategy.

Argentina Weekly Report

Risky Argentina

December 31, 2018BancTrust & Co. Research Team
  • Country Risk is still a factor
  • Electoral uncertainty as a main risk
  • Taxes on Financial Revenues as secondary risk
  • New disbursements from the IMF and the World Bank

After a month of improvements in the economic field and stabilization on monetary variables, country Risk is still a factor. Currently, Argentina’s country risk reached 744bp which is the highest level since September, just after August massive depreciation, showing that markets are more focused in other mid-term factors than in economic variables.

Specifically, markets are focused on what it could dramatically affect 2020’s confidence. On this matter, current risk factors can be divided into two:

– Electoral uncertainty as a main risk

2019 is an electoral year, and the biggest concern is the possibility of Cristina Fernandez de Kirchner (CFK) winning again an important political role. This scenario posts a real threat as CFK is currently enjoying stronger support than President Macri, according to various local surveys.

On the same matter, Macri’s allies are planning the possibility of dividing regional elections for the Province of Buenos Aires, separately from the Presidential elections. This way, PASO elections, which are the primary elections, will be held in August and Buenos Aires province elections will be held in September. With this scenario, CFK will not participate as a candidate for the regional election, guaranteeing Maria Eugenia Vidal’s victory -an important ally for Macri.

Vidal’s victory will give the necessary support for Macri to lead the fight in October’s elections against CFK, and probably wins on the second round.

Nonetheless, CFK supporters could consider the possibility that she could run for two different candidacies (president and governor), complicating the government’s plan.

The real risk here is that every scenario comprehends high possibilities of CFK returning to a powerful role, which jeopardizes creditors interests after 2020.

It is important to notice that until now, it is not official that CFK will run as a candidate for either governor nor presidential elections.

We at BancTrust believe that the best moment to analyze the real possibilities for next year’s elections is to wait for 1Q19 economic results.

Argentina Weekly Report

Good Vibes Everywhere

December 31, 2018BancTrust & Co. Research Team
  • Central Bank’s policies showed to be successful
  • The aftermath of the G-20 summit
  • Macri’s role at G-20 boosted his popularity  

After what had been a difficult adjustment in the monetary policy implemented by the BCRA, taking the economy into a steep contraction for this year’s GDP, Central Bank’s policies showed to be successful, overachieving the guidelines imposed by the agreement with the IMF.

Argentina Weekly Report

Time for G-20

December 31, 2018BancTrust & Co. Research Team
  • G-20 meeting dominates the scene
  • Main target: OECD
  • Investments coming
  • FX and monetary roundup

In Argentina, there is only one topic being talked about: G-20.

Argentina Weekly Report

Time for Achievements

December 31, 2018BancTrust & Co. Research Team
  • The end of Lebacs
  • FX risk is moderate
  • New instrument, wrong time
  • Dujovne and the OECD

This week the Central Bank in conjunction with the Treasury, achieved their first success on the list of economic goals: The end of Lebacs.

  • Tuesday, January 16 2018


    - Yesterday the President Nicolas Maduro gave its yearly speech which should be something close to the state of the union and that according to the constitution should be presented in front of the National Assembly. However, this year and arguing the illegality of the National Assembly, the decision was to give his speech in front of the National Constituent Assembly. In detail, more than a state of the union this was one of the usual speech of the President with not much data to collect. Among

  • Monday, January 15 2018


    - The dialogue meeting held in the Dominican Republic between members of the opposition and the government last weekend culminated again without any results. International mediators indicated that although some agreements were reached, several points remain pending and both parties will meet again this Thursday, January 18. In our opinion, it was expected that results would not be achieved,as we have been saying we believe that the most likely to happen is that the negotiation rounds will culmin

  • Friday, January 12 2018


    - The National Electoral Council (CNE in Spanish) announced that it has approved the schedule for the validation of political parties that did not participate in the last municipal elections which it will take place on 27 and 28 of January. The process will be carried out to comply with the order of the National Constituent Assembly (ANC), which has as its sole purpose to be another obstacle for the opposition. We believe that at the moment the attention is focused on the negotiations in the Dom

  • Thursday, January 11 2018


    - The situation regarding Venezuela’s debt with Brazil received yesterday two mixed updates, as the Brazilian Ministry of Finance reported that the first paid an old debt but that it is still in arrears with another payment. In detail, the ministry informed that Venezuela paid USD262.5mn – corresponding to the May-August period of 2017 – on 5 January as part of their commitments under the Reciprocal Credit and Payments Agreement (CCR), which is part of the benefits of the Latin American In


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