August 31, 2018 / 2:11 PM / a year ago

Argentina CDS and bond spreads jump as investors seek reforms

LONDON, Aug 31 (Reuters) - The cost of insuring exposure to Argentina’s debt jumped on Friday and the average yield spread of Argentine sovereign dollar bonds over U.S. Treasuries hit levels not seen since 2014 as investors sought signs of reforms to arrest the peso’s fall.

Argentina’s five-year credit default swaps jumped 70 basis points (bps) from Thursday’s close to 833 bps, according to IHS Markit, after the peso lost 20 percent of its value against the U.S. dollar over two days.

The average yield spread of Argentine sovereign dollar bonds over safe haven U.S. Treasuries on the JPMorgan EMBI Global Diversified index also leapt to 802 bps, its highest since October 2014, up 28 bps from Thursday’s close.

The peso firmed over 3 percent on Friday but investors still want to see a fiscal package austere enough to address their concerns over high inflation, a sputtering economy and the 2019 deficit.

Reporting by Claire Milhench Editing by Raissa Kasolowsky

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