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SWOT Analysis of Argentina's Credit Markets

SWOT Analysis of Argentina's Credit Markets

Bonds & Loans spent a week in Argentina meeting with some of the country’s key players in the credit markets space. What follows is a SWOT analysis summarising the key points to come out of our discussions, topics that will form the basis for the Bonds, Loans & Derivatives Argentina conference agenda.

Strengths

  • International capital markets activity is expected to keep growing in 2017, signifying a continued demand for Argentine credit
  • The inflow of USD deposits on the back of the tax amnesty has created an ample supply of cheap dollar liquidity in the local markets
  • Argentine corporates remain relatively deleveraged compared to their EM and DM counterparts
  • A number of important regulatory reforms, such as the PPP law, have already been passed and their implementation is expected to bring results in 2017

Weaknesses

  • The tenors available to Argentine borrowers and issuers remain short, within the up to 5 years range, preventing long-term investment and CAPEX increases
  • The peso bond and loan markets are more expensive than hard currency, creating a lack of depth in the local market
  • The non-investment credit rating of the sovereign is creating a glass window for top-tier Argentine names, hindering their access to better rates and terms

Opportunities

  • The new capital market law is expected to remove a number of restrictions affecting companies’ room for manoeuvre and significantly deepen Argentina’s capital markets
  • The government’s commitment to renewable and conventional energy is expected to bring the development of long-term capital-intensive energy projects to the fore in 2017
  • Argentina's vast infrastructure requirements offer an array of investment opportunities with the sector expected to lead the economy out of recession

Threats

  • The mid-term elections in October are expected to be too close for comfort, presenting a threat to the government’s market-friendly economic agenda
  • The economy has performed worse than expected recently, creating a threat to the sustainability of the reform process
  • An increase in US interest rates and investment could affect Argentine issuers by increasing the costs of accessing the international bond markets

 

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Bonds & Loans

Bonds & Loans is a trusted provider of news, analysis, and commentary that helps illuminate the most significant issues, events and trends impacting the global emerging credit markets.

 

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