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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 | Link to Comment Village Smithy
Village Smithy's picture

Nobody, nobody could have seen this coming.

Mon, 04/16/2012 - 13:34 | Link to Comment francis_sawyer
francis_sawyer's picture

Evil speculators!

Mon, 04/16/2012 - 13:41 | Link to Comment jayman21
jayman21's picture

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

Mon, 04/16/2012 - 14:15 | Link to Comment SilverTree
SilverTree's picture

"No risk of that"

Mon, 04/16/2012 - 16:13 | Link to Comment 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 | Link to Comment The Disappointed
The Disappointed's picture


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 | Link to Comment 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 | Link to Comment GeneMarchbanks
GeneMarchbanks's picture

CDS = obsolete.

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

CDS - Criminally deceptive shit

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

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

Mon, 04/16/2012 - 15:15 | Link to Comment 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 | Link to Comment aVian
aVian's picture

dont cry for me argentina...2001 redux?

Mon, 04/16/2012 - 16:28 | Link to Comment 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 | Link to Comment crawldaddy
crawldaddy's picture

much about nothing

Mon, 04/16/2012 - 13:35 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment Dr. Engali
Dr. Engali's picture

After Greece do CDSs have any meaning?

Mon, 04/16/2012 - 13:30 | Link to Comment mayhem_korner
mayhem_korner's picture



Silver swan, muppets.

Mon, 04/16/2012 - 16:16 | Link to Comment DoChenRollingBearing
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But that would be muppetz...

Mon, 04/16/2012 - 13:32 | Link to Comment navy62802
navy62802's picture

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

Mon, 04/16/2012 - 13:42 | Link to Comment 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 | Link to Comment TNTARG
TNTARG's picture

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

Mon, 04/16/2012 - 14:26 | Link to Comment xela2200
xela2200's picture

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

Mon, 04/16/2012 - 13:33 | Link to Comment LongSoupLine
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"Is this bullish for AAPL or Dancing With the Stars?" - The average American concern

Mon, 04/16/2012 - 13:33 | Link to Comment 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 | Link to Comment 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

Mon, 04/16/2012 - 13:33 | Link to Comment 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 | Link to Comment Corn1945
Corn1945's picture

Wonder when PetroBras will get it...

Mon, 04/16/2012 - 13:41 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment Darkness
Darkness's picture

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

Mon, 04/16/2012 - 14:04 | Link to Comment 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 | Link to Comment Canucklehead
Canucklehead's picture

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

Mon, 04/16/2012 - 14:08 | Link to Comment TNTARG
TNTARG's picture

Why should Argentina need any rescue at all?

Mon, 04/16/2012 - 14:10 | Link to Comment 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 | Link to Comment 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 | Link to Comment xela2200
xela2200's picture

Give the man a cigar.

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

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

Mon, 04/16/2012 - 14:26 | Link to Comment 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 | Link to Comment 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 | Link to Comment xela2200
xela2200's picture

Just like Evita. Oh wait.

Mon, 04/16/2012 - 15:17 | Link to Comment 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 | Link to Comment cnhedge
Tue, 07/10/2012 - 04:03 | Link to Comment nahshal
nahshal's picture

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