Latin American Bond Market Has New Contender for King of Chaos.

Bolivia's bonds are now considered some of the riskiest sovereign debt in Latin America due to a failed coup, a currency crisis, strikes, and fuel shortages. The extra yield demanded by investors to hold Bolivia's bonds over similar US Treasuries has increased, surpassing that of Ecuador and Argentina. The country's current account deficits and fixed exchange rate system have depleted its dollar reserves, leading to a shortage of dollars and difficulties in importing fuel and key products. Additionally, a power struggle between President Luis Arce and former President Evo Morales is hindering reform efforts. Despite the announcement of a major natural gas field discovery, Bolivia's bonds continue to decline. The government remains confident in meeting its obligations, but foreign currency reserves are low, and credit rating agencies have downgraded Bolivia due to liquidity pressures and sovereign credit risks. The country's fiscal deficit is expected to remain high, and there are concerns about the government's lack of action to reduce it. However, Bolivia does not have to repay any principal on its debt until 2026. Eventually, a debt restructuring is likely to occur. [Extracted from the article]