“The last section of the fall was very marked by the hardening of the statements of the officials regarding the agreement with the Fund,” Javier Casabal, AdCap fixed income strategist, explained in conversations with this medium.
The current prices of the securities are located in the area of US $ 33 for every US $ 100, with an average yield close to 20%. “They are just above those of the end of March 2021, when Global 2035 fell below $ 30, at a time when the market began to discount that negotiations with the IMF would be delayed beyond the elections. legislative “, remarked the specialist.
Is it time to buy?
In this frame, Tomás Ruiz Calderón, de Cohen, believes that, despite the titles are cheap, “until the end of the year there will be better opportunities to enter.” “The government seeks to face the final stretch of the agreement with the IMF with a more confrontational stance. Without the positive shock that this agreement could generate, the risks of further losses are considerable,” he said.
For his part, the Master in Finance Nery Persichini He stressed that “these price levels discount the fact that within a few years there could be a new restructuring much harder than that of 2020.” “Investing in Argentine bonds is not for everyone. Those who believe that the price is attractive must be convinced that Argentina is going to do all its duties to avoid defaulting,” he warned.
Under an optimistic look, the analyst highlighted the bonds issued under foreign law as the most attractive, especially for legal protection in the event of default. “The GD30 is the title that could best capture a normalization of the slope, while the GD35 it is the one with the greatest price reaction to capitalize on a sustained drop in yields, “he explained.
Meanwhile, Casabal recommends the bonds 2038, both under local and foreign law, since “they will almost double their coupons next year.” “The market prefers bonds with the highest coupon. That is why they rise more than the rest during rallies, but also fall less during corrections,” the expert deepened.
As for the bonds 2035, the AdCap member recalled that they were the worst performers during the corrections although he clarified that they could become the preferred option of the market in binary scenarios. “In a stress scenario (for example, a default with the IMF), they have less to fall due to their lower price. At the same time, in an optimistic scenario, they should also outperform due to their higher beta,” he said. .
Why are the bonds falling? Local or international factors?
Persichini stated that 70% of the bond yield is due to local factorsFundamentally because “the market understands that Argentina missed many opportunities to close an agreement with the organization”, something that for the economist should be solved soon, taking into account that the country currently does not have access to international credit.
Additionally, the analyst added the influence of the “swerve in economic matters after the PASO, tending to deepen fiscal, monetary and exchange rate imbalances, which also did not help to bring calm.”
With greater emphasis on the incidence of the situation at the local level, Ruiz Calderón assured that almost 100% of the latest drops in bonds correspond to the factors mentioned above, and that International news such as the Fed’s decision to begin withdrawing monetary stimulus in the US this month have little impact on international news.
“The Fed’s announcement was taken well by the market and Treasury rates, which had risen 30 to 40 basis points in October, calmed down after the announcement. The October rate hike did not help, but Argentina seems to be sufficiently decoupled from international markets for this type of movement to affect it, “Casabal said in this regard.
Regarding the macroeconomic scenario in Argentina, it is worth remembering that inflation accelerated to 3.5% in September, well above what the market expected. Faced with this scenario, according to the REM carried out by the Central Bank in October, the private sector adjusted its projections for 2021 upwards and now expects prices to accumulate an annual increase of more than 50%, which would be the second highest since 1991, behind the 2019 figure.
In parallel, the official exchange rate continues with a monthly rise of just 1% and the gaps with parallel dollars are at highs in 2021 due to devaluation expectations, taking into account that reserves are not abundant despite that exports are at record levels.
“The main problem for dollar bonds is Argentina’s lack of structural dollars. These bonds look a lot at the level of reserves.”Leonardo Chialva, an analyst at Delphos Investment, told Ámbito.
“The key to debt in dollars is the evolution of reserves. The agreement with the IMF plays a huge role in that sense, since if it had been carried out it would have meant savings in terms of loss of IR. The delay and stretching makes that the bondholders see that there is less currency in the future for them, “he said.