Reinhart Says Full Argentine Default Is Just a Matter of Time



(Bloomberg) — To Carmen Reinhart, an Argentine default is all but inevitable — and will likely come sooner rather than later.

The Harvard University economist says the government’s re-profiling plan is already a default on domestic debt, which rating companies will likely promptly respond to. While asking bondholders for more time doesn’t configure a default on its foreign obligations, it would be “a miracle if they get to six months.”

“You have the combination of political turmoil, a contracting economy, no access to private capital markets, the serious onset of domestic capital flight and extreme reliance on the IMF, which may not be sufficient to cover their debts coming due,” she said in an interview. “That’s pretty grim.”

Back in November, the Cuba-born economist — who was also deputy director of the IMF’s research department during Argentina’s 2001 crisis — warned that rising U.S. interest rates, slower Chinese growth and potential defaults put more stress on the developing world. At the time, she called Argentina “the weakest of the set,” saying the South American country had little margin “for any kind of error or negative surprises.”

By Reinhart’s count, Argentina has defaulted on its foreign debt eight times since 1800.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

READ  Japan PM Abe: Trust Kuroda's ability, leave monetary policy up to him

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





READ SOURCE

LEAVE A REPLY

Please enter your comment!
Please enter your name here