Mexico’s 100-year bonds are on the verge of losing all their gains over the past two years as speculation the Federal Reserve will curb stimulus overshadows the nation’s biggest economic reforms in almost two decades.
Argentina’s attempts to repair its standing internationally show the nation wants to tap overseas bond markets for the first time since a $95 billion default in 2001, according to former central bank governor Mario Blejer.
Vale SA’s perceived creditworthiness versus its competitors is sinking to the lowest since the financial crisis as swaps traders treat the mining company’s debt as junk on Brazil’s deteriorating finances.
During the depths of the financial crisis, Brazil began providing the nation’s most heavily discounted loans through state banks. Now, the program is being extended, deepening skepticism among bond investors the country has the wherewithal to rein in subsidized credit to avoid a downgrade.
By exploiting Argentina’s illegal currency market, buyers are extracting 39 percent discounts on luxury imports such as the Porsche 911 Carrera S sports car and creating the biggest foreign auto boom in five years.
Eric Francos, a French doctor on a three-week vacation with his wife and two children, was huddled off to one side of a pedestrian thoroughfare clogged with shoppers in downtown Buenos Aires, taking $100 bills out of his money belt as illegal money-changers beckoned with calls of “dollars, euros, exchange.”