Domestic bonds are currently pricing very pessimistic scenarios. However, 2019 debt payments would be guaranteed by part of the IMF loan specifically earmarked for reserve strengthening, which also implies that the Treasury does not have the necessary liquidity to meet future payments. Looking ahead to 2020, consensus among presidential candidates is to reach a debt maturities extension without principal haircuts, but we consider it a non-sustainable project in the medium term (i.e., 4 – 5 years) unless deep fiscal reforms take place.
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Fixed Income Weekly