Argentine stocks are poised to a boost from a likely decline in the nation’s credit risk by year-end and the presidential elections in 2011, according to analysts from Spain’s Banco Santander, one of the leading financial institutions in Latinamerica.
“Even without making an aggressive call on earnings growth, the fundamentals are strong enough to offset potential political risks,” the analysts said in a note today.
The Argentine economy will grow 5.2% this year, compared with a previous 4.1% forecast, while “country risk spread should decline toward year end” said analysts Walter Chiarvesio and Eugenia Fernandez Pouchan.
Santander’s top five stock picks in Argentina include Siderar SAIC, the nation’s largest steel producer, Telecom Argentina SA, the second-biggest telephone company, and IRSA, the largest real-estate company linked to George Soros.
Banco Macro SA, Argentina’s biggest bank by market value, and Pampa Energia SA, an electricity holding company, were also recommended by Santander.
Argentina is seeking to restructure 18.3 billion US dollars worth of defaulted bonds held out of a 2005 settlement. The debt swap offer closes June 22.
A successful restructuring will help Argentina regain access to international credit markets for the first time since its record 2001 default on 95 billion in bonds. It will also lower borrowing costs for provinces and companies that seek to sell debt.
The Argentine government has said it is about to reach its floor of acceptance for the new restructure which is 60%. So far 54% of holdouts have confirmed acceptance according to Economy minister Amado Boudou.