Portfolio dollarization: what Negotiable Obligations experts recommend at the beginning of the Milei era

Portfolio dollarization: what Negotiable Obligations experts recommend at the beginning of the Milei era

Investments: the sectors that experts recommend

“It is important to evaluate the entire situation and carefully select assets by industry and by company when thinking or rethinking the investment strategy,” he points out. Maria Moyano HidalgoInstitutional Sales Trader and expert in the energy sector of Adcap Financial Group. And he adds: “We believe that local macroeconomic risks are less likely to affect the Oil and Gas, Agriculture and Power Generation industries (only renewable), while the sectors of Energy Generation (non-renewable), Public Services, Telecommunications and Retail are the most vulnerable to currency devaluations, economic recession and loss of purchasing power caused by inflation.”

This is because regulatory policies mainly affect the manufacturing industries. Oil, Gas and Agriculture, given its great impact on obtaining foreign currency. In general terms, the credit health of Public Services, Oil and Gas, Telecommunications, Agriculture and Power Generation “is satisfactory”, maintain Adcap, with cash coverage for short-term debts of around 1.1x, according to Moody’s .

Despite the exposure to foreign currency, “the Public Services, Telecommunications and Non-renewable Energy Generation sectors may experience some weakness on their leverage.” Still, are expected to maintain acceptable levels, with a debt/EBITDA ratio of less than 2.5x. Furthermore, these sectors They do not face important maturities in 2024.

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agreement. In 2021, YPF proposed to the Mendoza government of radical Rodolfo Suarez a reduction in royalties to increase production in the province and generate a works plan of US$54 million.

In the field of Oil and Gas, YPF stands out with manageable maturities and easy financing in the local market, according to Moyano Hidalgo. Besides, Southern Gas Carrier (TGS) is attractive because it has an unregulated and exportable part. In the renewable energy sector, it is considered promising to YPF LUZ and Genneiawith ample growth potential given the transmission line expansion plan announced for 2035. Finally, Airports Argentina 2000 It is positioned as a solid option, since 85% of its income comes in dollars, which gives it some immunity against devaluations.

And, as he explains well Javier Timermanmanaging partner of Adcap Financial Groupduring 2022 and 2023, “investors have turned to Negotiable Obligations in dollars, avoiding the peso and sovereign risk.” This has led to a high parallel dollar market and “ON prices with limited profit margins.” Despite this, the Negotiable Obligations remain essential for conservative investors willing to accept high prices in pursuit of stability in a potentially volatile context in the parallel exchange rate.

“An outstanding example They are the ONs of YPF 2026which offer a coupon 9% in dollars and provide amortizations of almost 8% of capital each quarter,” says Timerman.

Along the same lines, he thinks Emilse Cordobadirector of Bell Bursátil, in statements to this medium: “Somewhat conservative, and more than anything to cover oneself in these times of uncertainty, a good option within the negotiable obligations may be the ON of YPF 2029”, which would pay 4.5% in dollars at the end of December.

CER and dual bonds: is it time to liquidate positions?

In an exclusive document of Facimex Securitiesit is proposed that currently, a favorable scenario is observed to sell long-term CER, “especially those with maturities starting in 2025.” This, despite the fact that the CER curve is at maximum levels, the existing parity, particularly in the long section, “is not adequately aligned with macroeconomic challenges.”

The Reserach team highlights that bonuses like Boncer 2026 (TX26) and the DICP have experienced a “marked compression of yields” in recent weeks, reaching lows since their issuance in 2020 and levels close to negative yields. “This suggests that this time may be the most opportune to liquidate these positions.”

The current strategy is to reduce the duration in CER, maintaining some hedge against inflation pending an adjustment. Priority is given to Boncer March 2024 (TX24) and to the Boncer of July 2024 (T2X4)with the intention of capturing a probable inflationary increase between December and February, “avoiding taking excessive duration risk in a period that will likely show an upward adjustment in the rates of the CER curve,” warns Facimex.

In a short-term approach, “maintain high liquidity while awaiting definitions” may be a prudent strategy. Furthermore, priority is given to February Dual Bonuses (TDF24) for hedging positions, since they seem attractive within the base case, although its performance depends largely on how exchange rate unification is approached. Likewise, the April Duals (TDA24) provide some risk diversification, but could be a bit expensive in relative terms by comparison.

FCI: a valid option in this context?

In the current market, there is a high demand for ON dollar linked, “which has generated a situation of overdemand in these instruments,” he explains. Marcelo Bastante, director of the consulting firm Marcelo Bastante. This high demand results in “they are yielding negative rates, making it difficult to acquire them in the market due to their limited liquidity and trading volume,” he warns.

On the other hand, we find the ON hard dollar, which are negotiated abroad and are denominated in dollars. Despite this characteristic, “they also do not have high liquidity, mainly because most of them are acquired by primary subscribers” during the initial subscription or bidding phase and remain in their hands.

A viable alternative could be investing in Common Investment Funds (FCI) who have these instruments in their portfolio. This is for individual retail investors, since accessing these instruments “can be complicated,” adds Bastante. Therefore, a recommendation would be to “be attentive to the primary tenders, where these titles are issued.”

However, he explains, the FCI They are a more accessible and liquid option. They allow shares to be subscribed and redeemed according to the investor’s convenience, offering a practical and functional alternative for those looking to diversify their portfolio with these financial instruments.

Thus, the FCI denominated in Dollars They are also an attractive option. Although they can offer interesting returns, It is important to note that its volatility can occasionally be significant. A key advantage of FCIs lies in their ability to facilitate diversification even with relatively low investment amounts, since they allow you to entrust the management of the investment to experts or professional portfolio managers.

Source: Ambito

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