Article / 20 June 2014 at 12:44 GMT

World Cup Bond Update: Could World Cup success lift Argentina?

Fixed Income trader / Saxo Bank
By Michael Boye

Argentina got off to a quick start when it won its first World Cup match last weekend. A couple of days later, though, it was back to reality for Argentina, when it lost an appeal concerning bond payments going back to its 2001 default. The verdict has put the country on the brink of renewed bankruptcy, as the Argentine government is being forced to honour imminent payments of billions of dollars. The country's current USD bond with a coupon of 8.75 percent and 2017 maturity recorded a steep drop, and is now trading at an effective yield of 14 percent.

The Argentine government has so far maintained that it will abide by all its commitments. The Argentinian people would, however, surely welcome any encouragement from the team's performance in Brazil, as it looks to extend its winning streak against underdog Iran.

We have already seen defending champions Spain knocked out of the competition and ever-high-aspiring England hanging by a thread. Come Sunday, Portugal must win to avoid having its name added to the list of fallen favourites.

Also in contention on Sunday will be outsiders Belgium and Russia. Earlier today, we highlighted CoCo bond issues. These two nations have interesting CoCo bonds on offer as well, including an EUR issue from Belgium KBC Groep and a USD issue from Russia's biggest lender, Sberbank.

Find out more inside this weekend's publication (attached).

Michael Boye is a fixed income trader at Saxo Bank. Click here for more of his articles.
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