No Chance of Argentine Default If I’m President, Fernandez Says

(Bloomberg) -- Argentina’s presidential front-runner Alberto Fernandez delivered his clearest pledge yet to repay the country’s debt while trying to reassure investors who fear his government could implement capital controls.

He added that he’s more worried about debt maturing in 2021 than next year. Bonds gained on his comments, with the yield spread over U.S. Treasuries narrowing 32 basis points to 17.82 percentage points.

“There’s no possibility that Argentina will fall into default if I’m president,” Fernandez said at an event in Buenos Aires, adding that capital controls aren’t the solution either. “I’ve already lived through a default and it’s very hurtful for society. No one could want a default as a solution.”

Investors have been punishing Argentine bonds for fear that Fernandez would restructure Argentina’s debt if elected on Oct. 27. The candidate, who defeated incumbent Mauricio Macri in a key Aug. 11 primary election, has called on the government to renegotiate a record $56 billion credit line with the International Monetary Fund, saying it’s impossible to repay that loan on time.

With investors and analysts discussing potential recovery values in an event of a restructuring and credit-default swaps pricing in a greater than 80% chance of non-payment over five years, Fernandez said seeking a haircut on debt is also out of the question.

“No one can seriously suggest a haircut because it’s debt
that’s been taken on two years ago by a democratically elected
government,” he said.

To contact the reporter on this story: Jorgelina do Rosario in Buenos Aires at jdorosario@bloomberg.net

To contact the editors responsible for this story: Juan Pablo Spinetto at jspinetto@bloomberg.net, Walter Brandimarte, Daniel Cancel

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