The sovereign debt in dollars recorded another bullish momentum this Wednesday, which allowed the country risk would decrease for the sixth consecutive day and are already operating in the green before the market opens this Thursday. Argentine bonds continue in positive territory and touch new historical peaks in Wall Street after registering an increase close to 10% in the last six sessions, so the index measured by JP. Morgan fell below 1,200 basis points and settled around 1,170, the lows of the era of Javier Milei.
As country risk approaches its long-term historical averages, analysts consider that there could still be room for further increases, although they recognize that growth potential seems more limited in the short term and some experts recommend dismantling positions, taking profits and adding shorter titles, for example.
The investment advisor, Gaston Lentini comments in dialogue with Scope that the entire range of sovereign bonds show a strong rise that may be driven more by the optimism of Argentines than by the interest of international markets.
The debt rally under the scrutiny of analysts
That said, the strategist does not suggest abandoning positions from one day to the next, But it is essential for him to stop along the way and think with a cool head about the reasons that led the investor to add a certain security to his portfolio and for what purpose, “since a sovereign that yields 10% in Argentina leaves us relatively close to a Latin American corporate or a LATAM Common Investment Fund (FCI) which can guarantee about 7%, “without having any national risk.”
For the economist Gustavo Berthe Argentine fixed income rally may find its foundation in a greater appetite among operators, which adds to a “positive expectation” regarding a possible Repurchase Agreement (REPO) to meet the upcoming capital maturities in January.
Sebastian AzumendiSR trader at Adcap Grupo Financiero, points out, meanwhile, that Argentina has carried out “very strong ‘outperforming’ in recent days, despite the rise in the US Treasury rate.” In that regard, he points out some key points that happened to get to this point:
- Last week, JP.Morgan He put Argentina as “overweight”, that is, as a “buy recommendation”. And remember that the Wall Street giant has the EMBI of Argentina in its indices.
- Morgan Stanley put Argentina on a buy recommendation.
And he adds that, although here in Argentina the country risk is measured every day, abroad there is an appetite for “high yield”, therefore, the demand for Argentina is sustained. The money laundering, the good demand for provincial and sovereign bonds, and the approval of the university veto also stand out as positive. and the possibility of “a REPO, which would help decompress debt profiles,” he maintains.
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JP Morgan put Argentina as overweight.
Reuters
For Juan Pedro Mazzastrategist Cohen Investmentsthis increase occurs in a context where the Central Bank (BCRA) surprised by extending an excellent performance in the exchange market, with daily purchases above US$100 million. “This was key to calming exchange fears. Besides, the veto of the financing law university student killed two birds with one stone and ratified the Government’s fiscal commitment, while showing that Congress remains under control,” Mazza shoots in statements to this medium and in line with Azumendi.
Dollar bonds: which are the market favorites
This being the case, it seems that the reasons why hard dollar titles they continue to party are varied. However, strategists have their favorites. The strategy recommended by Lentini It consists of a mix of sovereign fixed income composed as follows: “A short foreign law bond like the Global 2029 (GD29) that returns the capital soon, in order to reduce the risk exposed to the market and another long security that provides a greater “upside” in price over time and, If everything goes well, We have a high rate guaranteed until 2035 or 2038,” he slides.
Mazza agrees with Lentini and comments that the firm he represents likes short-term loans, such as Global 2030 (GD30) and Global 2029this over the long stretch, like the Global 2035 (GD35), Global 2038 (GD38), Global 2041 (GD41) and Global 2046 (GD46) “due to its aggressive amortization schemes.”
The strategist is optimistic and slips that, looking ahead to the remainder of 2024estimates that there may still be some distance left for the argentine rally. “The country risk below 1,200 basis points is still well above the rest of the countries in the region, so it may still continue to decline.”
Finally, Azumendi adheres to Mazza’s conclusion and asserts that this index “could continue to decline, but there are issues that could affect it, such as the conflict in the Middle East and the elections in the United States.” “On the home front, The ideal would be for it to continue going downbut it will depend on the accumulation of reserves,” he concludes.
So things are, sovereign debt shows solidityalthough its future will be conditioned by a balance between local economic decisions and external factors, while the country continues to be closely watched by international markets.
Source: Ambito
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