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The Argentinian central bank raised benchmark rates by 250bp to 42.5% on Thursday, the second hike this year to align with IMF’s call for rates to exceed the Latin American nation’s inflation that is currently at 51%. This comes amid talks between Argentina and IMF to iron out a deal to reschedule the former’s $40bn outstanding debt with the fund. The government expects to reach a staff-level agreement before March, as per Bloomberg. The central bank also announced the creation of a new 180-day note called Notaliq that will have a nominal rate of 47%.
Separately, FT reports that Argentina’s IMF agreement to restructure $44.5bn in debt was struggling to get through in the Congress just weeks ahead of a looming deadline to finalizing the deal. “Fernández is trying to hold the puzzle pieces of his coalition together,” a close adviser to the president said. The deal with the IMF which was announced in January could be derailed due to the congressional approval challenge. Argentina owes the IMF $19bn in repayments in 2022 due to the bailout in 2018 which includes a significant $2.8bn instalment due March 22.
Argentina’s bonds continue to trade at distressed levels with its USD 0.5% 2030s at 33.34, yielding 14.5%.
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