Friday, December 3

Argentine bond rally anticipated if IMF agreement closes before March

Likewise, the Merval advanced 61% so far this year if measured in the country’s official dollar and the trade balance would close with a surplus of US $ 79,500 million. “We believe that some investors are taking a long-term view of this loan by playing the regime change card,” Bernal added.

On the fixed income side, restructured bonds have no real carry (very low coupons), but Global bonds to 2030, for example, are currently yielding 14.4% to maturity (something “pretty decent,” he says. ). “We believe that these bonds could rise in the scenario that Argentina can sign an agreement with the IMF before the great amortization of March 2022 expires,” he remarked.

However, he also raised what would happen if the agreement is delayed: “Argentina without an agreement with the IMF is not a viable country. Therefore, we are almost fully convinced that there will be an agreement. The question is whether this agreement will be finalized ex ante if the country fully exploits, that is, if an agreement occurs before the second quarter of 2022, or if it occurs after Argentina is completely submerged in a chaotic economic and financial situation that forces the ruling coalition to ask for help from the international community ”.

“Some market experts tend to believe that a defeat in the elections will further empower Kirchnerism and therefore more populism will prevail. The problem we find with this vision is that it assumes that Kirchnerism is incapable of understanding that without an agreement with the IMF, and with a practically zero net balance on the reserves front, it will be impossible to maintain some kind of financial and external balance ” , they assured from the entity in relation to some views from Wall Street.

“We believe that Argentina without an agreement with the IMF would necessarily reach the presidential elections of 2023 under an economic depression, with draconian levels of financial repression, and most likely with very high levels of poverty (higher than those already alarming)”, shot XP .

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