Jan 30, 2020 - Economy & Business

Argentina's very unusual bond market

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Source: Risky Finance; Chart: Axios Visuals

Context: Local debt is riskier. The U.S. government can print money while the city of Detroit, or the state of Illinois, cannot. That's why the U.S. government borrows at much lower rates than Detroit or Illinois.

  • The same is true for nearly all the countries in the world. Countries can bail out cities and other sub-national entities, but if the country itself runs into trouble, it simply taxes those entities to raise the necessary funds.

Argentina is the exception to the rule. As Nick Dunbar of Risky Finance explains, some Argentine local governments, like the city of Buenos Aires or the province of Neuquén, are considered less likely to default than the sovereign. As a result, their bonds trade at significantly higher prices than the equivalent sovereign bonds do.

  • By the numbers: Argentina's sovereign bonds generally trade at around 50 cents on the dollar. The debt of Mendoza Province, by contrast, trades around 75 cents, while Neuquén trades at 85 cents. And the bonds of the city of Buenos Aires trade at 99 cents on the dollar.

The bottom line: Creditworthiness is a function of the debtor's ability and willingness to pay. In Argentina, both of those things can sometimes be found more at the regional level than within the national government.

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Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 2 p.m. ET: 5,929,312 — Total deaths: 357,781 — Total recoveries — 2,385,926Map.
  2. U.S.: Total confirmed cases as of 2 p.m. ET: 1,709,996 — Total deaths: 101,002 — Total recoveries: 391,508 — Total tested: 15,192,481Map.
  3. States: New York to allow private businesses to deny entry to customers without masks.
  4. Public health: Louisiana Sen. Cassidy wants more frequent testing of nursing home workers.
  5. Congress: Pelosi slams McConnell on stimulus delay — Sen. Tim Kaine and wife test positive for coronavirus antibodies.
  6. Business: Louisiana senator says young people are key to reopening the economy —U.S. GDP drop revised lower to 5% in the first quarter.
  7. What should I do? When you can be around others after contracting the coronavirus — Traveling, asthma, dishes, disinfectants and being contagiousMasks, lending books and self-isolatingExercise, laundry, what counts as soap — Pets, moving and personal healthAnswers about the virus from Axios expertsWhat to know about social distancingHow to minimize your risk.
  8. Other resources: CDC on how to avoid the virus, what to do if you get it, the right mask to wear.

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Twitter fact-checks Chinese official's claims that coronavirus originated in U.S.

Chinese Foreign Ministry spokesman Zhao Lijian. Photo: Greg Baker/AFP via Getty Images

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Why it matters: The labels were added after criticism that Twitter had fact-checked tweets from President Trump about mail-in voting, but not other false claims from Chinese Communist Party officials and other U.S. adversaries.

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