Argentina has gained favour with investors despite debts. The nation is expected to receive warm reception in international capital markets even with an outstanding USD7 billion default to the Paris Club, a group of prosperous creditor nations.

The Paris Club refinancing deal dates back to Argentina’s economic crisis in 2001-2002 where the nation defaulted on USD95 billion (*S$129.49) in bonds.

Economy Minister Amado Boudou announced that Argentina will reach a Paris Club settlement without mediation by the International Monetary Fund (IMF). IMF’s austere economic policy has been blamed for the collapse of the Argentine economy in 2001. 

In spite of the fraught relations between the IMF and Argentina, investor sentiment has risen steadily since the USD18.3 billion debt swap. There has been an improvement in the profile and risk perception of the Argentine economy and market pressure is expected to lift in the coming months.

Argentina’s credit ratings have been raised out of default two week ago and debt have narrowed approximately 100 basis points since the June swap. Interest rate are declining, spurring an influx of investors to Argentine corporate and government bond markets.

His Highness Sheik Nasser, the Prime Minister of Kuwait is leading a delegation to the Latin American nations and is set to sign a number of joint agreements with the Argentine government. Santa Fe is benefitting from a loan from the Kuwait Fund for Arab Economic Development (KFAED) that allowed the construction of roads. As the second largest country in South America behind Brazil, Argentina is growing in global importance and economic presence. Together with its abundant natural resources, it will not be wise for investors to ignore the developing nation.

The Argentine economy is expected to expand at least 6 per cent this year.

*Exchange rate correct as at 26 July 2010