The international agency Bloomberg published this week an article on the encouraging fiscal data presented by the province of Mendoza today.
Malbec-Soused Argentine Bonds Offer Haven for Hard-Hit Investors
By Scott Squires
Argentina’s Mendoza province has more to offer investors than top-flight Malbec and snow-crested Andean peaks: Its bonds are the nation’s top performers this year.
Amid the junk-rated moonscape that is most of Argentina’s debt, Mendoza’s bonds due in 2024 have returned 6.2% since Jan. 1, trouncing all other government and corporate notes, data compiled by Bloomberg show. They fetch about 75 cents on the dollar, below their mid-July peak of 88 cents but well above national and provincial notes that now sell for 40 to 50 cents. Province of Buenos Aires bonds slid 16% this year after one of the world’s biggest rallies in the fourth quarter of 2019.
The west-central region bordering Chile, home to about 70% of Argentina’s wine production, is emerging as an investor haven just as the central government seeks to renegotiate hundreds of billions of dollars of debt with private creditors and the International Monetary Fund. Buenos Aires province, meantime, is teetering on the brink of default as it attempts to delay a key bond payment, while the southern province of Chubut is proposing its own payment deferrals on bonds due in 2026.
“Part of Mendoza’s success it that it has good fiscal numbers, and it doesn’t have large bond maturities in the short term, “ said Ezequiel Zambaglione, head of strategy of Buenos Aires-based brokerage Balanz Capital. In addition, “the province has been quite responsible about cutting spending in recent years.”