The Federal Reserve’s brake on rate hikes gave rise to a more favorable global climate for emerging assets. And, on the other, at the local level, the market assigned a greater probability to the payment of coupons to bondholders, finally confirmed this week by the Government.
Sovereign bonds in dollars have deepened their upward trend in recent days and consolidated the recovery that began in June due to a combination of local and external factors. On the one hand, the brake on the rate rise of the Federal Reserve led to a more favorable global climate for emerging assets. And, on the other, at the local level, the market assigned a greater probability to the payment of coupons to bondholders, finally confirmed this week by the Government. In addition, the presentation of candidates gave certainty about the political direction as well as greater expectations of an agreement with the IMF. Analysts consulted by Ámbito agreed that there are positive prospects going forward and they expect increases between 10% and 20% over the next few months.
Dollar bonds rose an average of 30% in the last 30 days. The Globals showed an average rise of 26.54%, driven by GD35 (27.68%) and GD29 (27.6%). Likewise, the Bonares rose 30% on average, led by the AL29 (31.9%) and the AL30 (36.1%). This recovery caused the country risk to fall by more than 20% and even reached 2,000 basis points, the lowest level since the end of February.
Gaston Valles, trader in Quaestus Advisory, highlighted: “The confirmation of Massa as a candidate left the entire political arc more to the center right, and this was taken for good by investors, who already realized a general improvement compared to Argentine assets when they began to position themselves in equities , taking off this from fixed income. This accounted for a certain preference for the private over the public, but since the markets always seek balance in recent times, there has been a lateralization in shares and a violent rise in bonds, which leads us to think that there was some rotation . Regarding the economic part, the last exchange that the Economy had made was well received since it cleared large maturities that were in the quarter, added to the good tenders that the Treasury carried out where it managed to obtain positive financing ”.
Juan Manuel Franco, chief economist of SBS Group, He highlighted that “the rise is due to the fact that the market assigned a greater probability to the payment of coupons, although there was also some tailwind from other emerging markets.”
In this way, with the rise in recent weeks, the sovereign debt in dollars managed to couple to the strong rally of the S&P Merval, which reached maximums in dollars since 2019. However, despite the fact that the decoupling decreased in the last rounds, still remains very high, and is another argument to be optimistic about dollar bonds, according to analysts.
perspectives
Forward, Cappella considered that “the Argentine debt should have little negative news.” “The last obstacle to overcome was the payment of coupons and we already have a notice of payment. Therefore, now it remains to see the result of the elections and how the market takes it. So I think we will see the bonds lateralizing or continuing with their rise between now and the elections, ”he predicted.
In addition, Frank He pointed out: “The market could lateralize both in equity and in dollar bonds until there is a little more certainty in electoral matters. We are constructive in the medium term with bonds in dollars, and we emphasize that the incentives to restructure this debt are low given the very low coupons, in a context in which since the 2020 swap until today the rate increases in the United States were considerable. In addition, the outlook for dollar flows is optimistic, especially given the potential of the energy sector, which already this year showed notable improvements. Our top picks in global are the GD41 and the GD35”.
From balance They considered that “if the STEPs serve to clarify the expectations of a regime change, the bonds could rise between 10% and 20%.”
For his part, Valles said: “In the face of such an abrupt rise, a correction may follow in the short term, although in the long term I think there is still some way to go up. We must be cautious due to the shortage of reserves and payments just one month before the next presidential inauguration. Like any market, you have to know how to control risks and know how to take profits”.
Source: Ambito
