In the wake of a ruling party defeat in Congress and market uncertainty due to the collapse of its first law, major Wall Street banks are set to embark on a trip to Argentina tomorrow. The visit will be led by representatives from Barclays, Bank of America, Citigroup, Goldman Sachs and HSBC, along with a group of clients (mostly investment funds) to discuss Javier Milei’s program, the prospects of bonds and possible investments with officials from the Executive, the Ministry of Economy and the Central Bank, as well as businessmen, political consultants and economists.
Investors will come to “monitor” the sovereign bonds that several funds bought last December. With Milei’s rise to power and her promises to advance a shock plan, dollar titles rose up to 14%, but last week they fell to almost 7% after the setback suffered by the omnibus law and the war unleashed with governors. The banks hope that their clients will be able to meet with key government officials during their trip.
BlackRock bought last week US$ 1.8 million of Bopreal dollar bond, with which the government seeks to regularize commercial debt of companies. The operation became known after meeting that Milei had virtually with Larry Fink, CEO of BlackRock’s largest investment fund in the world. In recent days, major US banks issued cautionary signals about Argentina. JP Morgan estimated double-digit inflation until Q1 2023 and predicted a jump in official dollar in June. They also warned about risks related to governability and population tolerance for adjustment. This is why they considered rejection of omnibus law an unprecedented event that may require administration recalculate its political strategy opening door for more difficult period leading greater volatility which may impact exchange rate gap.