MercoPress. South Atlantic News Agency

Argentina's country risk close to an all time record low

Argentina's country risk dropped this week to 289 points the lowest in ten years and just a few points from the lowest ever reached in 1996 with 280 points.

The country risk marks the difference between local sovereign bonds and US Treasury bonds considered the safest investment in the world and an indicator much monitored by money markets.

Argentina's country risk peaked August 7 of 2002 with 7222 points, following the default and when there was no talk of a possible exchange or rescheduling of the then valueless bonds.

When the bond exchange became effective, the risk rate stabilized at 900 points and since then has consistently dropped stabilizing at 394 points one year ago, although it again peaked to 498, towards the end of 2005.

This week's risk index reduction comes at a moment when US Treasury bonds prices dropped following an increase in US retail sales, excluding oil, together with greater consumer confidence, which supposedly reduces the chances the Federal Reserve might decide to cut interest rates during this month's meeting.

The growing feeling among market analysts is that the Fed will keep rates stable, possibly until the end of next year's first quarter.

The improved risk indicator for Argentina was common to other emerging economies such as Venezuela and Brazil. In Hugo Chavez territory the risk rate contracted nine points ending the week at 219 basic points.

And in Brazil the 2040 bonds, the reference document, the risk rate fell to 159.6, almost reaching the all time historic 159 points.