Pakistan and Argentina bonds’ surge belies bigger reform hurdles

Pakistan and Argentina bonds’ surge belies bigger reform hurdles

LONDON - Investors have piled back into bonds in Pakistan and Argentina following cash infusions and optimism over multilateral support, but the two nations have secured only enough help to limp to autumn elections, experts said. The rally in international bonds issued by the two countries has intensified over the past two weeks, seeing returns on Pakistan's bonds soar to above 45% and Argentina's close in on 30% year-to-date, making them some of the best performers in their asset class, according to JPMorgan data. But the boost in the bonds belies the difficulties both nations face implementing major reforms once new leaders arrive after upcoming elections. "Its not enough to resolve the country's issues – not nearly enough," said Carlos de Sousa, emerging market portfolio manager at Vontobel Asset Management said of Pakistan's recent funding gains, adding Argentina's challenges are also immense. Pakistan's 11th hour deal for $3 billion from the International Monetary Fund (IMF), after months of talks got official approval this week. Saudi Arabia and the UAE followed with $2 billion and $1 billion infusions. This fresh cash means Pakistan is unlikely to default on its debt in the next six to nine months, said de Sousa. Elections