Javier Milei’s statements were precise, he will work to carry out a small State, respecting private property and free trade. He is going to honor the sovereign debt, a great news for hard dollar bonds, this implies probable increases for the AL30 and the entire family of sovereign bonds.
In radio statements he talked about how he should work to dismantle the leliq, and until he solves this problem, hyperinflation continued to haunt him. He is going to sell all the State assets that may be in the private sector, privatizing public companies, and YPF (not now, later when it has a greater value). This was music to the ears of the market.
Argentine shares abroad increased strongly, YPF rose 40%, before the round it was worth US$ 4.2 billion, at the end of the round US$ 5.9 billion, in just one round it added value for US$ 1.7 billion. That’s called credibility.
Argentina has not had an upward trend of this magnitude abroad for many years, and the possibility appears on the horizon that at this rate the country will once again recover international credit, something that has not happened since 2018.
Alberto Fernández did not obtain genuine financing throughout his entire mandate, not even when he restructured the public debt. Macri lost international financing in the first quarter of 2018, if Javier Milei obtains financing he will ensure that the country accesses private credit after 6 years. This implies a change in trend, but not the resolution of all the country’s problems.
The shareholders of Argentine companies went to sleep happy for one night, they had not made any money, but they have recovered much of what they have lost in years of unrest. Before the elections PASO YPF was trading around US$16.00, it fell to US$10 before the runoff, and yesterday it closed at US$15, if in the medium term it passes US$16 with the lower oil price, this will imply that the country risk is decreasing.
The local market opens on Tuesday, the AL30 bonds were quoted at US$26.60 on Friday, they could have a big rise, if they reach a price of around US$40 in the medium term, Argentina could agree to an operation of international credit guaranteed by these titles. Something not insignificant for a country that has a Central Bank with negative net reserves.
In the transition, the government of Alberto Fernández ordered that exporters will not be able to make deposits in banks updated by the wholesale dollar, something that importers will continue to do.
The export ended the Fernet dollar program, which was to settle 30% in cash with liquidation and 70% in the wholesale dollar, the government offered the half and a half dollar, like the Uruguayan drink Medio y Medio, which owes its name to the mixture of a sweet sparkling wine with another dry white wine, exporters will be able to settle 50% of their sales in the liquidation dollar and 50% in the wholesale dollar. With this, the government encourages exports, leaving Milei with little merchandise as a gift, and an overvalued dollar counted with liquidation.
Conclusions
. – If you have Argentine stocks, bonds or negotiable obligations, you have to be happy, the market went up and the mood changed.
. – Instruments in pesos will achieve good performance, today there is a tender for bills and bonds in the market for 1.3 billion, we believe that it will be renewed without problems.
. – Argentina has maturities of US$ 11,000 million in 2024, and everything would suggest that the government will be able to renew them without problems.
. – The next government will pay the interest on sovereign bonds in dollars, the AL30 is heading towards US$40 per sheet, it is an ambitious price, but it can be achieved if Milei reopens the international credit markets.
. – The export dollar would be around $610, it is a good time to liquidate, the gap with alternative dollars will be very low. If the MEP dollar were trading at $880 tomorrow, the gap with the exporting dollar would be 44%. Those who do not arbitrate miss out on the best business in recent years. We have never seen such a low gap, nor will we see it in the immediate future. Attention those who have wheat, corn and soybeans, to liquidate and buy the MEP dollar.
. – Buying dollars until December 10 will be a big deal, the coming government will have to realign relative prices, and the dollar will look for another equilibrium price, what we have in the market is a real bargain.
Source: Ambito
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