Bolivia's Election Shakes Markets: A New Political Era?

Bolivia's international dollar bonds surged amid early election results indicating an unfavorable outcome for the ruling socialist party, marking its worst electoral performance in a generation. Investors are optimistic about a political shift that could stabilize the Bolivian economy, avert a debt default, and potentially secure an IMF program.

Official results show the socialist candidate Eduardo del Castillo obtaining just 3% of the presidential vote, while Bolivia's 2030 bond rose over 3 cents to 79.88 cents, leading in JPMorgan's emerging markets bond index. Centrist Rodrigo Paz and conservative Jorge "Tuto" Quiroga are the leading contenders with over 32% and nearly 27% of the votes respectively.

Final results will be released in a week, with the possibility of a runoff if no candidate achieves over 40%. Tellimer upgraded its recommendation on Bolivia's bonds to 'buy' in light of the election results. The nation, facing high inflation and low reserves, sees Quiroga as a potential stabilizer due to his IMF and World Bank experience.

(With inputs from agencies.)