In the currency spherethe parallel exchange rate seems to remain calm, after the end of the soybean dollar, that He brought I get one large sum of foreign currency necessary for a central bank that he had his reservations in red.
Against this background of domestic, inflationary and foreign exchange volatility, Ambit contacted specialists who made their recommendations on which bonds would be more convenient to acquire under this scenario: CER (adjusted for inflation), Dollar Linked (indexed by the exchange rate) o Dual (CER or exchange rate)specially for those capped that have enabled only this investment alternative.
What is the current situation of the bond market in pesos?
Since Facimex Securities, Adrian Yard Buller warned that the bond market in pesos recovered since the episode of stress that occurred between June and July Thanks to the strong intervention of the BCRAbut there were sequels. “Valuations for instruments maturing through 2023 recovered significantly, but instruments maturing after 2024 suffered more than the rest, suggesting that investors are still reluctant to finance the presidential transition. Precisely, the Doubts about the ability of the Treasury to place debt maturing beyond next yearkeep a open question and the economic team has not yet been able to give an answer that is sufficient to clear it up”, said the specialist, clearly marking a notable uncertainty about the titles due to the local situation.
Mauro Cognetta, Director of Global Focus Investments said the market currently reflects the macroeconomy with profound weakness in the numbers, in which high interest rates prevail, high expectations of a slight jump in the exchange rate and one prevailing inflation. And he indicated that logically bonds discount these problems.
“The linked dollar bonds have not been the most profitable because inflation has beaten the depreciation of the exchange rate. The CER papers have been those of better performance because of the high inflation we have,” he emphasized. Cognetta.
Since Criteria They indicated, for their part, that the bond market in pesos has normalized overcoming the mid-year volatility, where the active policy of the BCRA What buyer of last resort managed to calm him down. “This bonanza could be lastinggiven that policies have been added to lengthen short maturities of the public debt towards the second half of 2023. terms with the private sector would manageable as long as no new obstacles appear”, they expressed from the research team
What do analysts project about the fixed income market in pesos?
Yard Buller described that the new economic team undertook to limit public spending via monetary issuance in the remainder of the year, which implies that the financing needs will be covered exclusively via debt placements in pesos. “This will be quite a challenge for the local currency market, since we are going to have to see how much appetite investors have to continue supporting the Government and how the curves hold up in the face of the issuance of new debt. The last tenders left good sensations in this sense, although this is step by step”, highlighted the economist.
Cognetta expressed that he sees a scenario with a higher probability of “status quo”, in which it is they will equate nominal variables such as the interest rate and the exchange rate, with the level of inflation. “We believe that inflation will win all the variables, the interest rate will try to be superior, As the Government has agreed with him IMF. Now we are in positive values of effective rate in real terms,” said economist.
For his part, from Criteria they stated that the tranquility of the markets puts in the center of investments to bonds in pesos adjustable with horizons of 6 to 9 months, concentrating the analysis of the evolution of the official exchange rate Y inflation. “We carry out scenario analysis contemplating that the devaluation rates of the official exchange rate and inflation will be similar in the coming monthswith an alternative where the first exceeds it by a few percentage points”, they contemplated.
Linked dollar bonds, adjusted by CER or Duals?
From Facimex Securities they stated that long CER instruments they are more attractive due to their valuation levels and his greater downside protection via parities. According to the Linked dollar debt consider that “It seems a bit expensive at the moment unless one has a high conviction that a jump devaluation will occur, although it is not the most likely scenario.
In the same way, Cognetta acknowledged that he leans toward inflation-adjusted bonds. With respect to the duals, pointed out that the evaluates particularly in tenders, already the dollar linked securities he does not consider them adequate for the current prices.
“Inflation puts a movement floor on CER bonds, that have been replicating the rise in prices very well. A As inflation drags on, our recommendation is heightened. Inflation will not decrease if measures are not taken to root it outso that the CPI could be around 110% by 2023, according to a Morgan Stanley reportthat is, almost double the budget Y defended by (The Secretary of Economic Programming) Gabriel Rubinstein at the official conference. So this variable is the most important driver to make in decisions. To get to a break even or breakeven point should double the official exchange rate to match it with the interest rate exceeding $600 a year from now”, expanded the operator.
And in the same linesince Criteria They stated that under these scenarios, their calculations confirm that inflation-indexed bonds would have higher yields than those indexed by exchange rate or dual. “However, in recent weeks we have seen that the market had an upward adjustment in the yields of all the debt in pesos and the dual bonds were the ones that suffered the most, so they could be a good alternative if the exchange rate went to vary well above inflation,” they concluded.
Source: Ambito
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