A Key Indicator Under Pressure
Argentina's country risk, as measured by JP Morgan's EMBI+ index, surpassed the 500-basis-point mark on Tuesday, August 18, 2026, hitting levels not seen since late May. According to trading screens from Rava Bursátil, the index reached 506 basis points in the first trading session of the week, up 17 points from Friday's close (+3.48%). Other sources, such as Infobae, reported the indicator touching 512 points during the day, its highest level since May 21.
This level contrasts sharply with the 402 points seen in mid-July, when it marked a low for Javier Milei's administration, and reflects growing market distrust regarding the country's economic and political outlook.
What Is Country Risk?
Country risk measures the difference between the interest rate a country's sovereign bonds pay and that of U.S. Treasury bonds, considered risk-free. This spread, calculated by JP Morgan through the EMBI+ index, reflects investors' perception of a country's ability and willingness to repay its debt. A rising indicator implies greater doubts about a nation's economic and financial stability.
Why Is It Rising?
Analysts agree that the rise in country risk stems from a combination of domestic and external factors. Among internal factors, the following stand out:
- Electoral uncertainty: the approaching 2027 elections and polls showing declining approval for the ruling party.
- Deteriorating economic activity: recent data shows a mixed economy, with labor-intensive sectors still struggling to recover.
- July inflation: the monthly CPI was 2.1%, but the year-on-year rate reached 33.8%, above expectations.
- Opacity of the new monetary scheme from the Central Bank and the Treasury.
On the external front, consulting firm Grit Capital pointed to strong pressure on long-term interest rates in the United States, Japan, and Brazil, linked to concerns over fiscal deficits and refinancing costs in major economies. The yield on the 30-year U.S. Treasury reached 5.30%, its highest level in two decades.
The 'ATM Effect'
A phenomenon that amplified the impact on Argentine debt is the so-called 'ATM effect'. According to Grit Capital, Argentina has one of the most liquid dollar-denominated sovereign curves among emerging markets. When global fund managers need to quickly reduce portfolio risk, these securities become one of the easiest assets to sell.
On Tuesday, sovereign bonds fell up to 2% in dollar terms, as seen in the Bonar 2035 (AL35D) and Global 2046 (GD46D) issues. In August, hard-currency bonds have accumulated an average loss of 4%, while country risk has added more than 60 points over the same period.
Argentine Stocks in the Red
The Buenos Aires stock exchange also reflected the market's sour mood. The S&P Merval index fell 1.3%, trading at 2,905,247 points, equivalent to US$1,837 when adjusted by the dollar “contado con liquidación” (CCL). In the leading panel, the biggest losses were among financial companies: BBVA (-4.1%), Banco Supervielle (-3.8%), and Banco de Valores (-3.8%).
On Wall Street, Argentine ADRs (American Depositary Receipts) also suffered significant losses: Corporación América plunged 6%, followed by BBVA (-4.2%), YPF (-3.4%), and Banco Macro (-3.4%), in a session marked by declines in major New York stock indices.
The Dollar: The Other Side of the Coin
While country risk rises, the official wholesale dollar remains below $1,500, a 'fictitious' ceiling the government aims to sustain at the cost of higher interest rates. On Tuesday, the wholesale exchange rate closed at $1,495, up $6.96 from Friday (+0.47%).
At Banco Nación, the official retail dollar ended at $1,515, while the MEP (electronic market) rose to $1,521.95 and the CCL to $1,580.43. Current exchange rate bands set a floor of $745.79 and a ceiling of $1,865.14.
Key Figures
| Indicator | Value |
|---|---|
| Country Risk | 506–512 basis points |
| Wholesale Dollar | $1,495 |
| Official Dollar (Banco Nación) | $1,515 |
| MEP Dollar | $1,521.95 |
| CCL Dollar | $1,580.43 |
| S&P Merval | 2,905,247 points (-1.3%) |
What Analysts Say
Leading local consulting firms and brokerages agree that the punishment of Argentine assets was greater than what emerging market moves would justify:
- GMA Capital: 'The exchange-rate calm did not translate to the rest of local assets: equities deepened their correction and country risk kept climbing.'
- SBS (Juan Manuel Franco): 'The indicator is moving away from the 400-point level seen weeks ago, amid a mix of volatile external context and a slower pace of BCRA purchases in the official exchange market.'
- Cohen Aliados Financieros: 'After several months trading above their emerging-market peers, Argentine bonds corrected and the market returned to focusing on local fundamentals.'
- Consulta 1816: 'Recent polls suggest Milei's approval has returned to lows—or near-lows—of his administration.'
- Fundación Mediterránea: Highlighted restrictions on international capital movements and a history of defaults as factors that 'do not rank well' for Argentina.
Fiscal and Electoral Front
The electoral context is already present in markets. Consulting firm Outlier points to 'pre-election noise' and 'political deterioration' as factors explaining the rise in country risk. Meanwhile, the government seeks to accumulate reserves: the Central Bank has bought almost US$14 billion so far this year, though the pace has slowed in August.
Economy Minister Luis Caputo announced a relaxation of dollar-denominated credit for companies that do not generate foreign exchange, a measure aimed at reactivating the economy but generating debate among economists over currency mismatch risks.
With debt maturities of US$27 billion in 2027 (including US$6 billion with the IMF), pressure on the government's economic scheme is growing. Economist Carlos Melconian warned that the government will have to choose between 'disinflation, reserve rebuilding, and reactivation,' since 'all three together are impossible.'