Many countries around the world are struggling with the low price of oil. Argentina had a strong economy when the price of oil was high. However, over the past two years, Argentina has had to deal with falling oil prices. The government of the country is running massive deficits, and many companies are struggling to survive. It will be interesting to see how the nation comes out of this economic crisis. Highland Capital sees opportunity to invest in Argentina. Government bonds pay a high yield right now, and James Dondero wants his company to get a piece of the action. Investing in Argentina’s bonds is risky, but the potential returns are high.
Over the past few years, James Dondero has done a great job of leading Highland Capital. The company has more sales and profits than ever before. Dondero knows that the company must get creative in order to continue growing. The stock market has been rising for almost seven years now, and he feels like it is important to branch out to other investment vehicles. Investing in government bonds is generally a safe investment. However, when you are investing in bonds of a country in financial trouble, the investment is no longer safe. The bonds must pay out a high yield to entice investors to buy them.
The entire economy of Argentina revolves around the price of oil. Unlike many other nations, Argentina has little economic diversity. In addition, the government is running high deficits in order to keep things going in the country. The current path is simply not sustainable, and many credit agencies have downgraded the country’s credit rating. There are some economists who predict that Argentina will be unable to survive the low price of oil for much longer.