Among the biggest advances of the day were the Bonar 2038 (+5.2%); Bonar 2035 (+4.7%); and Bonar 2041 (+4.7%).
Operators and analysts agree that the drop in bond parity in recent weeks could complicate the launch of a potential “Repo” between entities to strengthen the limited reserves of the Central Bank (BCRA).
The Government announced in mid-January the repurchase of bonds for around 1,000 million to improve the debt profilewhile a source close to the negotiation said that the Ministry of Economy recently received seven offers for a ‘Repo’ loan for about 1,000 million dollars.
Beyond the rebound this Wednesday, dollar bonds accumulate declines of almost 16% in the month of February. Although the local factors involved in this collapse are well known, there are also external factors that prevent the Government’s goal of lowering the country risk from actually happening. In this note, one by one the causes.
According to the latest PPI report, although the poor performance of the bonds in February is well known, it attributed the cause to the decision of the Central Bank, reducing the aggressiveness of its bond repurchase program, causing short bonds to yield more than long ones. . “We believe that this trend can still be maintained this week, with the GD41 being the bond that we currently find most attractive in relative terms. The event to monitor will be the Treasury tender scheduled for Friday the 24th, whose conditions we hope will be known during the conference tomorrow”.
Among other reasons, there is also investors’ fear of default, the upcoming elections and the uncertainty of government policies also generate instability in bonds and the dollar. This year the course of Argentine investments will be marked by the electoral results and the firmness of the next measures,” he said. Juan Alra, Portfolio Manager at Southern Trust TPCG Group in dialogue with Ámbito.
One of the factors hurting bond prices is the Fed’s rate hike. For investors, inflation seems to be more persistent than the market expected and now they expect the Fed to stay tight for longer. “With such attractive rates in the US, emerging markets took a hit and Argentina’s performance was no exception as our emerging trend-adjusted Argentine bond price series and beta show,” the latest report said. of PPI.
A rise in rates causes capital to go from risky countries to less risky ones. To see these trends, one usually looks at the emerging market bond index, an ETF that replicates an index of sovereign debt in dollars from emerging countries that fell 4% per month. Emerging countries will rely heavily on the aggressiveness of the Fed. Stronger policy will likely cause bonds to fall further.