Key insights
- Bolivian sovereign bonds are plunging due to political instability and supply chain disruptions. While this is primarily an emerging market issue, it highlights the potential risks associated with investing in politically unstable regions and could indirectly impact broader emerging market sentiment, leading to a minor negative influence on US equities.
Investing.com -- Bolivian sovereign bonds fell for a 10th straight day on Tuesday as road blockades cut off food, fuel and medical supplies to the administrative capital La Paz.
Dollar-denominated notes dropped more than five cents over the past two weeks, the worst performance in emerging markets. The yield on notes due in 2031 climbed to 10.6%, up from 9.75% at issuance three weeks ago. Notes maturing in 2030 fell over a cent on Tuesday. Barclays recommended selling the 2031 notes.
Nearly 60 road blockades across six of Bolivia’s nine departments, mainly in the west, have disrupted supply chains. The blockades threaten to paralyze La Paz’s economy and push up inflation, which already stands in double digits.
Protesters are demanding the resignation of President Rodrigo Paz, who took office seven months ago. The national labor union, the La Paz farmers’ federation and supporters of former President Evo Morales are leading the demonstrations. Paz’s calls for dialogue have been ignored.
Morales has been hiding in Lauca Ñ since October 2024 to avoid arrest warrants for statutory rape and human trafficking. On Monday, coca growers stormed an army base in Cochabamba searching for foreigners they said were plotting to capture him.
Bolivia’s Senate passed legislation on Tuesday to ease rules for declaring a state of emergency, which would suspend certain individual rights. The bill is being debated in the lower chamber.
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