The financial market is attentively awaiting the inflation index for May and the result of a tender for Treasury bonds, the results of which will be known in the afternoon.
Argentina announced on Monday an optional regime for copper export rights through the option of a progressive rate with the aim of promoting production and foreign business.
On Tuesday, in a day of panic and high global risk aversion derived from the increased probability of a recession in the US, Argentine stocks sank up to 12% on Wall Street, while dollar bonds lost up to 5.4 %, to record new historical lows, which led the country risk to exceed 2,100 points, in a local context of growing economic and financial doubts after the liquidation of titles in pesos last week, and the jump of the stock market dollars .
Fears that a world’s highest inflation determine that the central banks raise their interest rates, strongly affecting economic growth, together with the challenges that Argentina must face in the coming months, caused a strong selling trend due to unwinding of asset positions.
On Tuesday, sovereign bonds denominated in dollars returned to record lows, losing up to more than 4%, after a week shaken by the sale of titles in local currency linked to inflation. The falls were led by the Global 2030 (-4.3%); Overall 2038 (-4.2%); and Bonar 2038 (-4.1%).
The weighted average price of the Globals pierced US$27 and fell to US$26.84, marking another new post-restructuring low and pushing the average rate up to 25.3%. “For bonds in dollars there is no interest, which is why it is a totally closed market. Only the bonds that adjust for inflation remained, but now they are also a little closed,” commented an economist.
Thus, the Argentine country risk carried out by the JP. Morgan bank shot up 4% to 2,124 units, an absolute record since September 2020, after the millionaire private foreign debt swap.
In the peso segment, in turn, CER bonds, heavily punished last week, ended with most losses, which reached 2.5% (Par and Boncer 2026), after a slightly upward start. Buyers appeared in the short section of the curve (short Leceres and Bonceres), but the long section continued to be weak.
According to what was perceived on the screens, the BCRA would have been active in the short CER tranche, especially in the bills that the Treasury is putting out to tender this Tuesday, they noted from PPI. In the market, they estimated that the rescue of Common Investment Funds (FCI) tied to the CER would have continued, given the firmness of the financial exchange rates.
For the economist Gustavo Ber, “the sudden selling pressure on the CER securities could complicate the next debt auctions where they must face challenging ¨roll-over¨, since otherwise there would be no other alternative than to deepen monetary financing, with inopportune effects adverse effects on inflation and financial stress”.
“The main thing is to see if the debt market in pesos is closed to the Government or they will be able to issue debt at reasonable rates. If it is closed, the macroeconomic deterioration is going to be very high, since the program with the IMF becomes unfulfillable and the alternatives would be very expensive,” said Roberto Geretto of Fundcorp.
He added that “in this scenario, before a due date, the alternatives are to issue to be able to face it (more inflation), reshape the debt (affects the solvency of investment funds and banks) or use bank liquidity via regulations (increases bank risk). and can generate a run)”.
Let us remember that, in this Tuesday’s tender, Economy will seek to capture $14,000 million, through the issuance of one Lelite on 07/15, two Ledes (S31G2 and the new S30N2) and two Lecer (X21O2 and X16D2).
Meanwhile, in another round of low volume, dollar-linked sovereign debt continued without interest and traded almost unchanged in the short tranche, but was offered in the long tranche (TV24), which lost 3% (already yields 6, 9% TNA).
Source: Ambito
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