Last week, Argentina faced the payment of some US$4,360 million for capital and amortization of two of its main public securities, the ‘Globales’ issued under foreign law and the ‘Bonares’ under protection of local law.
“The first days of the new year showed the continuity in the increases in Argentine bonds and stocks with the country risk marking new lows. CABA’s retail inflation data (3.3%) supported expectations that national inflation in December would be around 2.5%, which would result in a drop in the crawling peg to 1% and a reduction in interest rates,” estimated Delphos Investment.
“At the local level, The focus will be on December inflation to be known on Tuesdayand which, according to market consensus, would be 2.7%. In addition, on Wednesday the leading index of the Torcuato Di Tella University will be released (it seeks to anticipate changes in trends in the economic cycle), while On Friday the fiscal results for the last month of the year 2024 will be published“Balanz recalled in a report.
“The market discounts that a reduction in the pace of currency devaluation would be accompanied by a reduction in the interest rate.”“, estimated Wise Capital.
“As has happened on previous occasions, given good inflation data, the BCRA could have in mind a reduction in the monetary policy rate,” said GMA Capital Research.
“Given a historically low exchange rate level and a 15% gap, It is natural to wonder if dollar gains from peso instruments are still viable. The truth is that the strategy is subject to old and new risks,” he said.
Waiting for new funds to improve the BCRA’s reserves
“Given the current characteristics of the Argentine economy, (the new agreement with the IMF) would be a Stand-By Agreement (SBS) or an Extended Fund Facilities (EFF), in both cases, with conditionalities and disbursements limited to compliance. in periodic reviews,” said consulting firm Analytica.
“The SBA addresses needs of short-term balance of payments or unexpected external shocks and usually lasts 12 to 24 months; while the EFF is of longer duration (3 to 4 years) and includes structural reforms,” he noted.
“Investor optimism continues to promote renewed bets on any respite along the way,” said economist Gustavo Ber, noting that “this is mainly due to the ‘macro’ progress and expectations for negotiations with the IMF that could soon lead to fresh funds, which would allow us to reinforce reserves and thus be able to continue facing the exit from the stocks.”
“The bonds continued to advance, celebrating the assured payment of the coupon and taking the country risk to break the barrier of 600 points (560 points). The question now is where the dollars from those coupons will go. Quick answers: optimists extend duration towards maturities 35/38/41, while the More cautious shorten duration by going to Bopreales or, to a lesser extent, corporate bonds“, estimated Andrés Vernengo of CMA.
“The financial surplus (achieved by the Government) gives the certainty that the Government has enough money to pay interest and that the only thing it does is roll over the debt. It does not increase the debt but cancels it, pays interest and amortizes it, thereby reducing the stock of debt,” said Mariano Sardans, director of FDI Asset Management.
“The critical issue is the generation of external reserves; It is limited by an exchange rate that seems low, the export liquidation mix and export withholdings, which were not taken advantage of to begin to compensate with the reduction in the Country Tax,” said VatNet Financial Research.
“The key dates are January 20, which is Donald Trump’s inauguration, and January 29, the first Federal Reserve meeting of the year. After these events, we are left with negotiations with the IMF, and the prospects for the 2024/25 harvest. that would contribute dollars from the end of March onwards,” estimated analyst Salvador Di Stefano.
“In conclusion, January is a month to unsaddle until it clears, make friends with liquidity, stocks and bonds should adjust downwards, and if you want to buy, don’t hurry, the market will give you the opportunity you are looking for,” he said.
Source: Ambito
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