After the devaluation of official dollar and waiting for the data inflation measured by the INDECwhich will be announced next week, many investors began to disarm wallets from strategies Dollar Linked to CER after the PASO, taking advantage of the freezing of the crawling peg and the pass through. However, this change is not entirely linear: the market is already beginning to see a bid between the two hedging instruments and there are rumors that are beginning to raise doubts: the increase in nominal value and a possible increase in the Bank’s interest rate. Central.
The first glimpse of this disassembly of portfolios came with the tender surprise of Ministry of Economy of last Friday, where 60% of the financing was made up of dual bonds, seeking inflationary coverage and also in the exchange rate, and 31%, by instruments adjusted by CER.
As reported Personal Portfolio Investments (PPI) and taking as reference the movement of the official exchange ratel in August (27.1%), only titles Dollar Linked and duals they managed to exceed or match the performance. Meanwhile, the ERC instruments they approached the Dollar Linked, showing increases in pesos of between 14% and 21%. Anyway, the real rates of inflation-linked securities compressed and remain in negative territory until mid-2024.
Sebastian Suh, portfolio manager Adcap Asset Management and manager of FCI Adcap Coverage (CER), supported Ambit that the Boncer (bonds adjusted by CER, that is, by inflation) marked considerable gains in recent weeks. For example, Adcap Cobertura, our FCI CER, rose 14.5% since PASO, capturing a large part of the higher demand for inflation coverage“.
However, “complementarily, we have seen that, slowly, the demand for assets was returning Dollar Linked. We consider that the investors they continue to look for more coverage in the face of short-term economic and political uncertainty”. Also, this investor’s conception is based on the possibility that the Government will be forced to carry out at least one more devaluation, pressured by the increase in the currency gap near the elections.
While, Federico Broggi, Institutional Sales at IEB Group maintained that the market “He is totally devoted to the coverage Search, both through ERC instruments like those that follow the official dollar. This is seen in the streams of income to CRFs CERs and Dollar Linked“.
“The why is found in the increase of the nominality of the economy after post step devaluation. A devaluation which was not, because the gap with the parallels continues above 100%, then, the only thing that generated was a acceleration of inflation product of exchange rate jumpwithout diminishing the expectations of new rises in the value of the dollar in the future and continued acceleration of prices in the economy. In this way, we hope that the coverage demandBroggi said.
Bond Investments: What is the expectation?
According to the consultant, the prevailing uncertainty “implies taking the debt in pesos with great caution” and recommend in general terms the Dollar Linked instruments or a “Barbell” strategy on the CER curve (short-term position) before exposing yourself to the middle tranche of CER. Which indicates, at the same time, the need for investors to cover in the very short term and the difficulty thinking beyond October.
For his part, IEB and Adcap coincide in which the CER bonds and Dollar Linked they are “a convenient investment until October.”
The consultancy 1816, on the other hand, prefers bonds Dollar Linked above the CERs. “The fact that the setting delay in dollar-tied assets be much less than the CER It is also relevant given the nominality. The duals They are also a valid alternative, although only for moments in which the optionality implicit in these instruments justifies the lower performance that they have regarding the Linked Dollar”.
Facimexfor his part, affirms that both the Dollar Linked Like the duals look expensive compared to CERs from the point of view of the bilateral real exchange rate which equates the yields between both curves. In the case of hedging instruments, futures appear to be a more attractive short-term alternative, although we must not lose sight of the uncertainty regarding an eventual repositioning forward”.
Bond Investing: What’s On This Week?
Despite this trend, the debt in pesos begins to show his weakness in the middle of a context of uncertainty. The falls were pronounced for the last few days in the Dollar Linked and dual sovereigns. And, the most affected are those linked to the strategy that pursues the evolution of the official exchange rate. According to PPI, the rate spread between the TZ24 and TV24 compressed. ” He market expects the increase in real exchange rate be less robust for March/April 2024. In other words, that the official exchange rate beats inflation, but by a magnitude less than expected a couple of days ago”.
In conclusion, despite the negative rates, the bonds continue to be an option maturing in October to capture part of the transfer to post devaluation prices. After, It will be another story.
Source: Ambito
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