The LTP Trade Finance IndexÖ - the independent total return index covering the trade finance asset class - reflected further credit problems in November, driven principally by the slow-motion sovereign default taking place in Argentina. Another sharp hike in Argentine credit spreads - coupled with a slight increase in USD LIBOR - generated a capital loss for the month, the first in 2001. Overall, Trade Finance credit spreads are at their highest for the year.
Argentina's steady economic deterioration has forced Economy Minister Cavallo to offer creditors a 'debt swap' better described as a unilateral renegotiation of terms. Given the alternative - a barely-veiled threat of outright default on existing sovereign obligations -...
