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January 23, 2023
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Bonds in foreign law dollars showed gains of more than 84%

Bonds in foreign law dollars showed gains of more than 84%

All tranches of the Globals’ dollar titles showed significant increases since July.

Bonds in dollars under foreign legislation showed gains in six months of more than 84%, encouraged by a better local outlook and a more pleasant external climate for emerging markets.

Since the end of July last year, the Global bonus 2029, the one with the shortest term and one of those mentioned by Minister Sergio Massa as the target of the purchases that the Central Bank will make on behalf of the Treasury, jumped more than 77%, going from US$19.41 to US$ 34.5; while the Global 2030, another of those mentioned, increased its price from US$ 19.35 to be worth US$ 35.70 (+84%) today.

All tranches of dollar securities of the Globals -those governed by the New York courts- showed important increments from July 22 of last year to today.

The Global 2035 rose 69%, the Global 2038 accompanied with an advance of almost 53%, while the Global 41 increased its value in the last six months by 45%, and the Global 46 gained 70%.

Consulted by Télam about the increase that the sovereign debt in hard currency is showing, Santiago López Alfaro, president of Patente Valores, pointed out that there are two reasons: “external and internal”.

“The high yield or emerging market bonds, rose in the last six months close to 20 or 25% because the long rate in the world stabilized and even fell. This allowed the bonds that suffered a lot from the rate hike to recover,” López Alfaro explained.

For the economist, Argentine bonds rose even more than their emerging peers “because they have a greater vein, that is, a greater risk. As the local market was calmer as a result of the good bids, the stability of the dollar also helped boost the price.”

For his part, Diego Martínez Burzaco, Head of Research at Inviúexplained that the reason for the rally was opportunity purchases, with bonds trading at parities well below what they should be, “even considering all the risks of a situation for Argentina.”

“This was also complemented by the economic orthodoxy applied by Massa since its arrival, especially in terms of slowing down the pace of primary spending a bit, which has been falling for five consecutive months in real terms. This settled the accounts a bit and allowed us to comply with the agreement with the Fund,” he specified.

For Martínez Burzaco, the bonds had started the year 2022 very badly and were at their lowest level at the time ex-minister Guzmán left.

They recovered strong now, but They are at the same level as December 2021.

In the same line, Javier Casabal, fixed income strategist at Adcap Grupo Financierotold Télam that, since the arrival of Sergio Massa at the Ministry of Economy, sovereign bonds in dollars “have had an extraordinary recovery.”

“As local sources of concern fade, but global Fed rate concerns also fade, the market is beginning to see that sovereign bonds were over-punished, allowing a rally of this magnitude to unfold.” .

Casabal pointed out that the expectation of an election year, where the chances of two moderate candidates leading the political bid are growing, has a very positive impact on all local financial assets and “the last announcement of the repurchase of dollar bonds made by The power minister is going up, showing that the negative side is even less”.

Finally, in a IEB Group report They pointed out that the rally has a “political” explanation as Minister Sergio Massa became the main referent of the ruling party in the face of the PASO prior to the 2023 presidential elections.

“This situation was complemented by some Positive developments for the Argentine economy: a successful debt swap in pesos -which clears up doubts until March-, the fulfillment of the goals with the IMF and the entry into force of the free availability agreement of about US$ 5,000 million of the swap with China”, they specified from IEB.

For the Alyc, this scenario lowers the risk of Argentine assets, which opens the possibility of a higher potential for both sovereign bonds and gives a couple of months for a “carry trade” summer.



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