Meanwhile, the losses of the papers of local companies that are listed on Wall Street (ADRs) are led again by Mercado Libre (-5.8%). These assets and those of Globant show collapses of almost 25% in this beginning of 2022.
The fall in these shares coincides with the decline of technology companies in international markets as a result of the signals the Fed gave about an imminent tightening of its monetary policy, which would imply a reduction in their asset holdings and a rate hike earlier than expected.
Beyond this juncture, the founder of the financial education portal interfinance, Sergio Morales pointed out that the performance of Mercado Libre and Globant also has to do with the fact that “certain technology companies are adjusting due to the overshooting that they had post-pandemic”. “In fact, with this drop, both are + 100% higher than their 2020 floor. In addition, particular issues such as, for example, the announced capital increase of MELI, etc., have an influence,” he said.
Meanwhile, at the local level, the market’s attention remains on how the problems will be solved. differences between the Government and the IMF regarding the fiscal path that Argentina should follow. From Casa Rosada they seek that the reduction of the fiscal deficit be gradual, to reach a balance in 2027, while from the agency they intend for the correction to be faster, by cutting spending in real terms.
Where there is agreement is on the need to reduce the financing of the deficit via issuance, to combat inflation with various tools (less issuance + increase in exports + price agreements to coordinate expectations), to have an exchange rate consistent with the the country’s ability to accumulate foreign currency, and to have positive real rates to encourage savings in domestic currency.
The latter has already begun to be reflected in the recent decision of the Central Bank (BCRA) to increase its reference rate to 40% (48.3% in effective terms), although it still seems insufficient to beat an inflation that in 2022 would reach 54 , 8% according to the consulting firms and financial entities that participated in the last REM.
Chief of Staff Juan Manzur assured that “the Argentine government’s political decision is to agree” with the institution led by Kristalina Georgieva, who in the last hours warned that “emerging economies must prepare for US rate hikes”, which could trigger capital outflows and a depreciation of their currencies.
Bonds and country risks
For its part, sovereign dollar bonds sink to 3,4%, after collapsing to 8% last week, affected by tensions with the IMF.
In this context, Country Risk rises 29 units (1.8%) to 1,833 basis points, the highest level since November 30.
“IMF tensions tend to have a greater impact on dollar bonds and, therefore, on Country Risk. We believe that in the base scenario of an agreement with the IMF, in the short term there will be a lot of volatility in securities, in fact It is what can be observed in the experiences of other countries, “said Maximiliano Donzelli, Head of Research at InvertirOnline (IOL) in dialogue with Ámbito.
However, the analyst projected that “after an agreement is reached, it should be expected that the country risk begins to decrease (in the period of 6 months to 1 year) and in that sense, dollar bonds will be hard and mainly those that they are foreign law, they should benefit. “
Beyond the uncertainty surrounding the agreement with the Fund, the Government shows signs of wanting to reach a middle ground, based on the interest payments made recently and the statements of officials warning about the risks of not agreeing.
At the same time, this Monday, US $ 693 million will be paid to private bondholders for the second interest coupon agreed in the 2020 restructuring.
In the exchange, Economy Minister Martín Guzmán achieved a reduction in average interest rates, from approximately 7% to 3%.
Coupons have a bottom-up structure to ease payments in the early years. In this opportunity, the rate will be between 0.5% and 2.5% nominal per year depending on the bond.
The next debt payments correspond to maturities with the IMF. In the next three weeks there are obligations for $ 1.1 billion. In March, another US $ 2,900 million will expire with the agency.
Source From: Ambito
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