On the other hand, heThe bonds in pesos were also mediated by uncertainty and the lowering of rates by the Central Bank caused the bonds in CER to stand out, which rose up to 10% in pesos, above the inflation expected for May. While the dollar linked bonds, an opportunity appears despite the negative return.
“Investors who look at the medium and long term and bet on exchange convergence can see value in dollar linked papers, even yielding negative ones, especially considering that the carry differential against other alternatives would decrease if the central bank (BCRA) continues to cut reference rates with the aim of reducing stocks and interest payments of remunerated liabilities,” said the SBS Group.
However, “for bonds in pesos, we prefer the CER debt over the Lecaps, although those who have certain doubts about the crawling peg and whether or not it can be maintained at 2% per month, can combine it with some dollar linked bonds.”
Meanwhile, SBS recommends that, “optimistic investors can bet on the long section with GD35while those who believe that the compression of the short section can take the curve to levels of, for example, Ecuador, can see more value in GD30.” For conservatives, “and always staying on the Global curve, We see value in GD41, a bond with poor relative performance compared to the rest in recent months and that it has a better coupon than others while also having better legal conditions in adverse scenarios,” explained Juan Manuel Francos, Chief Economist of the SBS Group.
While, Melina Di NapoliWealth Management product analyst at Balanz maintains that in the spectrum of sovereign bonds in pesos due to the impossibility of dollarizing their portfolios, “We note that the majority of CER bonds are above their par value, while for sovereign bonds in dollars we observe valuations around 50% of parity on average. In a country without stocks, this divergence of parities should be reduced” .
In that sense, Di Napoli also recommended positioning itself in CER Bonds: “short bonds to accrue inflation in the coming months, for example the Boncer due 07/26/2024 – T4X4- and Boncer Vto 12/13/2024 -T5X4-. For longer-term positioning, “We prefer sovereign bonds in dollars, specifically Global 2028-GD38-“.
The performance of BOPREAL
The bonuses BOPREAL stood out with double-digit increases of up to 15% in the month of May. Thus they present themselves as a less volatile alternative to their Treasury peers. This was clearly reflected in May, accumulating a drop of 4.0% against the fall of approximately 10.0% in global and bonars.
“Their main attraction is that they mature completely during the years of Milei’s presidency, which has proven to be a government with a high willingness to pay. The fact that they are not exposed to the risk of the next administration has a lot of value for the market” , explained Juan Pedro Mazza, Fixed Income Strategist at Cohen. That is why Bopreales seem to be a good alternative for conservative profiles seeking to dollarize portfolios.
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Thus, Mazza maintains his recommendation:“PY26 and BPD27 as an alternative to moderate the risk of Treasury bonds and maintain all maturities in Milei management. BPJ25 only for investors who need to get dollars quickly.”
Mateo Reschini, on shore specialist at Inviu highlighted that for a moderate profile the Bopreal Series 3, the BPY26″. For an aggressive profile, the low parity Global 2035 “We see it as interesting for the future, but obviously for aggressive profiles and with a longer holding period.”
The rise of the dollar and what is coming
Another of the characteristics that marked the The month of May was the rise of the dollar. The drop in rates not only caused other instruments to become alternatives such as lecaps, but also the exchange rate, a classic refuge that with prices around $1,000 became attractive.
Thus, the Dolar blue ended the month with a jump of 18% at $1,225, followed by the MEP dollar at $1,217 (+16%) and the CCL at $1,248 (13.5%).
Due to this rise in exchange rates, lThe exchange gap advanced to 34%, having reached a peak during the month of 42%.
Fixed income investments: the data to follow in the month of June
In the short term, the fixed income investors The following variables will have to follow: export liquidation flows, the dynamics of public accounts so that the fiscal anchor is sustainable and, finally, politics. The game in which the Government manages to approve the Bases law and negotiate with the opposition will be played there, analysts agree. In fact, they give the Bases law one of the most important factors for it to be consolidate the Government’s roadmap.
Regarding the dollar, Mazza maintains that it is important to have a perspective on the evolution of the dollar in the medium/long term.
According to the government itself, the current economic scheme aims at an exchange rate unification as soon as possible. He lifting the stocks is a necessary condition For foreign investments to appear, there will be no capital entry as long as their exit remains prohibited. With this in mind, the government has confirmed that Argentina is moving towards a free currency competition scheme and that it will lift the stocks as soon as it has finished clean up the BCRA’s balance sheet by accumulating reserves and the elimination of paid liabilities. In this sense, Milei recently confirmed that she plans to eliminate the 17.5% PAIS tax that today functions as a floor for the exchange gap.”
From their perspective, it is most likely that this exchange rate unification will occur at a cheaper financial dollar than the current one in real terms. “That is to say, we believe that financial dollars will lose ground against inflation in the remainder of 2024. This is partly due to the strong fiscal anchor, which discards the need to finance the Treasury monetarily. In the same sense, the cleanup process that the BCRA’s balance sheet is going through is an important factor – it aims to completely eliminate the payment of interest on remunerated liabilities.
Source: Ambito
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