The One Essay

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Should Argentina be Welcomed Back by Investors? Should Argentina be Welcomed Back by Investors? Arturo C. Porzecanski After a relatively brief interruption in access to the world’s financial markets in late 2008 and early 2009, latin America has been experiencing a renewed wave of capital inflows – so much so that the issue of how best to ride this wave has become a major policy concern (Eyzaguirre et al. 2011). The intensity of investor interest in the emerging markets generally, and in latin America in particular, has been heightened by the prospect of continued lax monetary conditions in the United States, and thus by the outlook for persistently low interest rates and bond yields in the world’s leading financial centres. The search for fixed-income returns higher than the 1–4% range that prevails in much of Europe, as well as in Japan and north America, has prompted bond For the first time in over a investors to venture into increasdecade, a number of single-Bingly risky territory, such as singlerated Argentine corporations, B-rated credits – Argentina among plus three provinces and them, the country involved in the the municipality of Buenos largest sovereign default in history Aires, have been able to (Moody’s 2010a). issue international bonds This is why, for the first time raising more than $6 billion in over a decade, a number of at yields mostly in the single-B-rated Argentine corporarange of 8% to 12%. tions, plus three provinces and the Arturo C. Porzecanski, distinguished Economistin-residence, is a professor of international economics at American University and a Senior Associate at the center for Strategic & International Studies. WORLD ECONOMICS • Vol. 12 • no. 3 • July–September 2011 13 Arturo C. Porzecanski municipality of Buenos Aires, have been able to issue international bonds in 2010 and so far this year, raising more than

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