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Argentina Default Risk Surges On YPF Nationalization, CDS Approach 1000 bps

Tyler Durden's picture




 

It would appear that the recent renewed excitement down in the Falklands was indeed the writing on the wall for a nation that is now desperate enough to nationalize foreign entities. Argentina, still unable to access capital markets years after its restructuring appears to be hitting an irrational wall again as its CDS has exploded wider recently, and even more so today with the YPF news, to near 1000bps - its widest in 4 months. Simply put this is not rational in any game-theoretic strategy and is frighteningly indicative of a supreme (irrecoverable) defection from friends-with-benefits status of the world - indicative only of massive internal problems in the South American nation. But do not worry, as Lagarde and her friends will just bring a bigger bag around to the next G-20 meeting as we are sure the IMF's members will have enough money to deal with Argentina AND Europe.

Chart: Bloomberg

 

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Mon, 04/16/2012 - 13:29 | 2349011 Village Smithy
Village Smithy's picture

Nobody, nobody could have seen this coming.

Mon, 04/16/2012 - 13:34 | 2349028 francis_sawyer
francis_sawyer's picture

Evil speculators!

Mon, 04/16/2012 - 13:41 | 2349060 jayman21
jayman21's picture

Coming soon, shorts to be banned at a market near you

Mon, 04/16/2012 - 14:15 | 2349161 SilverTree
SilverTree's picture

"No risk of that"

Mon, 04/16/2012 - 16:13 | 2349604 DoChenRollingBearing
DoChenRollingBearing's picture

French and Argentina citizenism elects these kinds of blobbers up.

Hollande, biches!  France will choose: POISON!

Mon, 04/16/2012 - 14:36 | 2349238 The Disappointed
The Disappointed's picture

jayman21,

So what happens to the Morgue's massive (and well-documented) silver short position when they can't game the price anymore?

As Ralph Cramden would say: 'One of these days, Alice, to the moon.'

Or as The Mogambo Guru says: 'Whee! This investing stuff is easy!'

The Other Dave in SF (where all of the swans are pink and we're f***ing proud of it!)

Mon, 04/16/2012 - 13:36 | 2349036 tempo
tempo's picture

Retail sales just a reflection of the trillion+ deficit spending.  Its meaningless and will drop like a rock when, no if, deficit/outofcontrol spending is cut.   It will drop even if the rate of increase drops.

Mon, 04/16/2012 - 13:29 | 2349013 GeneMarchbanks
GeneMarchbanks's picture

CDS = obsolete.

Mon, 04/16/2012 - 13:41 | 2349052 Crash N. Burn
Crash N. Burn's picture

CDS - Criminally deceptive shit

Mon, 04/16/2012 - 14:29 | 2349218 Flocking swans
Flocking swans's picture

four people seem to really like CDS.... why? Really. Please explain.

Mon, 04/16/2012 - 15:15 | 2349363 Dr. Engali
Dr. Engali's picture

I am trying to figure that out too. Especially after they were proven to be worthless with Greece.

Mon, 04/16/2012 - 13:31 | 2349017 aVian
aVian's picture

dont cry for me argentina...2001 redux?

Mon, 04/16/2012 - 16:28 | 2349672 Bicycle Repairman
Bicycle Repairman's picture

At the turn of the 20th century, Argentina had the 5th largest GDP in the world, and was a wealthier nation than the US.  Argentina was more of a European country than a Latin American one.  True story and there's plenty of object lessons in Argentina's history.

Mon, 04/16/2012 - 13:29 | 2349018 crawldaddy
crawldaddy's picture

much about nothing

Mon, 04/16/2012 - 13:35 | 2349019 hotrod
hotrod's picture

Probably ECB/banker instigated to scare the PIIGS from defaulting like Argentina did.  See what happens when you dont have access to capital/credit markets.  Make Argentina the poster country for bad decisions. Austerity is a better longterm solution

Mon, 04/16/2012 - 14:23 | 2349184 TNTARG
TNTARG's picture

I'm really curious in knowing what bad things have being happen in Argentina since the default on December 2001. All the data I can get tells about Argentina's growth, poverty going down, industry developping fast, things like that.

Mon, 04/16/2012 - 15:56 | 2349534 gofigure
gofigure's picture

shhhh.. no one wants to hear all the good things that happen when the bankers are told to take a hike...

Tue, 04/17/2012 - 05:58 | 2350785 davood
davood's picture

These Gringos know fucking nada about Argentina.

The inflation there is running high, but that is mainly the result of (1) Argentina being an export-driven nation like China that needs to devalue its currency against the USD in order to stay competitive as an export nation, and (2) the "tail that wags the world" hyperventilating the world with its worthless USD.

Mon, 04/16/2012 - 13:32 | 2349020 Dr. Engali
Dr. Engali's picture

After Greece do CDSs have any meaning?

Mon, 04/16/2012 - 13:30 | 2349021 mayhem_korner
mayhem_korner's picture

 

 

Silver swan, muppets.

Mon, 04/16/2012 - 16:16 | 2349610 DoChenRollingBearing
DoChenRollingBearing's picture

+1

But that would be muppetz...

Mon, 04/16/2012 - 13:32 | 2349024 navy62802
navy62802's picture

Doesn't this almost guarantee a military conflict with Britain?

Mon, 04/16/2012 - 13:42 | 2349064 Bam_Man
Bam_Man's picture

Not really. Just plenty of Argentinian-style threats and bluster.

War would be quite another matter entirely. The Argentinian army makes the Italian army look like world-eaters.

Mon, 04/16/2012 - 14:17 | 2349170 TNTARG
TNTARG's picture

Right. Argentina isn't interested in any conflict at all.

Mon, 04/16/2012 - 14:26 | 2349199 xela2200
xela2200's picture

Spain is the one affected not England (at this point).

Mon, 04/16/2012 - 13:33 | 2349025 LongSoupLine
LongSoupLine's picture

 

 

"Is this bullish for AAPL or Dancing With the Stars?" - The average American concern

Mon, 04/16/2012 - 13:33 | 2349029 Marginal Call
Marginal Call's picture

And this is why the miners don't rise in proportion with metals.

Mon, 04/16/2012 - 14:28 | 2349211 xela2200
xela2200's picture

Excellent point. Silver wheaton just got hammered today. Probably because of the Barrick’s Pascua-Lama project straddling the border of Chile and Argentina. Reads like an Ayn Ryan novel

 

http://silverwheaton.com/

Mon, 04/16/2012 - 13:33 | 2349030 q99x2
q99x2's picture

Close the boarders. Kick the money changers out of the temple. Rebuild the infrastructure. China will buy your nationalized oil.  Free hunger tastes better than debt hunger. In any case, hunger only lasts so long.

Mon, 04/16/2012 - 13:33 | 2349032 Corn1945
Corn1945's picture

Wonder when PetroBras will get it...

Mon, 04/16/2012 - 13:41 | 2349061 EBR MOD 0
EBR MOD 0's picture

Soros probably got a heads up so he dumped his stake alrerady, can't let the NWO not get their perks now can they.

Mon, 04/16/2012 - 13:38 | 2349045 adr
adr's picture

What the capital F is going on with the markets today? Is the Dow advance all IBM????

The Nasdaq momo monkey kings are getting obliterated. Did the hedgies all need to redeem due to major margin calls???

Never thought I could see Dow up 90 points with the Nasdaq and S&P down.

 

Well it looks like the FED has stepped in and started buying at 1:30 PM. The losses are reversing and it looks like we'll have an all green day by 2:00.

Mon, 04/16/2012 - 13:39 | 2349048 Bam_Man
Bam_Man's picture

Argentina has been frozen out of global capital markets since their last default in 2001 so I'm not sure just how important this development is. Anyone who has been holding Argentinian debt since then probably isn't interested in CDS protection - that horse left the barn 11 years ago.

But it's interesting to see that the time between defaults/hyperinflations/economic collapses has now been compressed down to just 11 years. Amazing.

Mon, 04/16/2012 - 14:10 | 2349155 TNTARG
TNTARG's picture

I think you're missing something here. All Argentina's fondamentals seem to be ok.

Mon, 04/16/2012 - 14:34 | 2349225 xela2200
xela2200's picture

I don't know where you got your fundamentals, but everybody in the region is waiting for Argentina to lay an egg. They been messing with Uruguay for a few months now. Basically with protectionist measures even going against established treaties. Aslo, europe is a big market for them.

Mon, 04/16/2012 - 15:02 | 2349306 TNTARG
TNTARG's picture

It isn't. Markets for Argentina (the big ones) are some Arab countries, China, India. Not much the UE. USA: Argentina is negative in I/E  with the US. Nothing to worry about from that front.

Mon, 04/16/2012 - 15:57 | 2349542 Bam_Man
Bam_Man's picture

Argentina's inflation rate is so high and the government under-reporting it by so much that the Economist stopped publishing the figures in their weekly tables.

Mon, 04/16/2012 - 14:13 | 2349162 YC2
YC2's picture

thats not an uncommon period of time even between entire currencies in Argentina

 

or Brazil, and probably a lot more of latin america

Mon, 04/16/2012 - 13:40 | 2349050 mayhem_korner
mayhem_korner's picture

 

 

After losing out to Spain in the last World Cup, maybe the Argentinians figure they better not let the Spaniards outdo them in CDS premiums.

Mon, 04/16/2012 - 13:41 | 2349062 blu
blu's picture

It's damned scary what happened in Argentina in 2001. I'm allowing myself to imagine that happening in maybe a half dozen similar sized nations all at the same time, and wondering how the hell the global markets would survive it.

Well they would not. Simple as that.

Mon, 04/16/2012 - 13:54 | 2349096 Darkness
Darkness's picture

Does this mean I should buy Gold? What would Ron Paul do?

Mon, 04/16/2012 - 14:04 | 2349131 marathonman
marathonman's picture

Gold - long term yes.  Short term suggests waiting for the dollar to start falling again.  With the pain in Spain there is a lot of run into USD's that will crimp gold.

Mon, 04/16/2012 - 14:06 | 2349134 Canucklehead
Canucklehead's picture

Why should you think "gold" when the rest of the world thinks "plastic"?

Mon, 04/16/2012 - 14:08 | 2349144 TNTARG
TNTARG's picture

Why should Argentina need any rescue at all?

Mon, 04/16/2012 - 14:10 | 2349147 Arnold Ziffel
Arnold Ziffel's picture

Now Argentina needs to sell the oil and gas at market price to the countries willing to pay for the unfixed, scam free, unmanipulated, Pelosi adjusted prices of the commodities.

Mon, 04/16/2012 - 14:14 | 2349160 TNTARG
TNTARG's picture

Argentina doesn't need to sell oil. Argentina requires the oil for the argentinean's needs.

Mon, 04/16/2012 - 14:46 | 2349267 xela2200
xela2200's picture

Give the man a cigar.

Mon, 04/16/2012 - 14:12 | 2349150 wee-weed up
wee-weed up's picture

Argentinian people... "Not this shit AGAIN!!!"

Mon, 04/16/2012 - 14:26 | 2349204 Lucius Corneliu...
Lucius Cornelius Sulla's picture

I'm sure that Christina and Michelle are political soul mates.  The Obamas and the rest of the lefties must be salivating over XOM and CVX after reading this news.

Mon, 04/16/2012 - 14:37 | 2349239 Clowns on Acid
Clowns on Acid's picture

First the oil / gas compnaies ...then the mining (gold/sliver) companies.

The socialists know no bounds in trying to maintain their power.

"Don't cry for me Argentina"....will become popular again when Cristina declines.

Mon, 04/16/2012 - 14:47 | 2349270 xela2200
xela2200's picture

Just like Evita. Oh wait.

Mon, 04/16/2012 - 15:17 | 2349371 johny2
johny2's picture

Land of Silver is doing fine. Why not go all the way and fix peso to Argentum? There is a small matter of Nato, but the moment may be right...

Tue, 04/17/2012 - 04:29 | 2350753 cnhedge
Tue, 07/10/2012 - 04:03 | 2601324 nahshal
nahshal's picture

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jogos educativos

 

 

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