As the yield rate on the AL30D bonar increases, the gap with Lecaps also grows, making this dollar instrument more attractive, especially if the profitability exceeds 9%. That makes it more attractive to investors.
Both the MEP dollar and the CCL rose this Thursday, December 26 and maintain the trend this Friday. The “cable” touched $1,190, while the gap between the “stock” and the official reached seven-week highs. The dollar CCL climbed $14 (1.2%) to $1,187.62 and the gap ended in the 15.4%. Meanwhile, the MEP dollar advanced $9.92 (+0.9%) a $1,170.89 and the spread with the wholesaler was 13.6%, the highest level since November 7.
In that sense, since Aurum Values, highlight the opportunity that hard dollar sovereign bonds continue to provide, particularly considering the solid performance of fiscal accounts. The broker reminds that on January 9, a significant payment will be made to the private sector (not counting the intra-SPN debt) for about US$3.5 billion in capital and interest.
And he adds that “this payment will generate an excess supply of foreign currency, without increasing the supply of sovereign bonds in dollars in the market, which should drive a new rise.”
Furthermore, it highlights that the higher gaps at each level of Internal Rate of Return (IRR) make the position in AL30 more attractive than in Lecap. Considering a greater probability of IRR reduction throughout the year, and the uncertainty regarding the elimination of the stocks, “the ‘breakeven’ gap levels are low enough to favor positioning in AL30 over Lecaps, standing out as a most beneficial option in this context,” the report states.
Expected performance for globals
If we also take into account that other emerging markets are offering lower yields than those of Argentina, Aurum foresees a positive performance in the short term for hard dollar bonds. “The following table illustrates how the prices and variations of GD30 and GD35 bonds could behave if Argentine debt converges to the yields observed in other emerging countries towards the end of the first quarter of 2025.” The AL30D is the dollar version of the Bonar 2030.
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Regarding yield expectations, “we estimate that the highest probabilities are located in the range of yields between 8% and 8.5%, similar to that of bonds from countries such as El Salvador and Nigeria,” the report indicates.
The study indicates that, if the AL30 yields 11.2% going forward, its value in dollars as of June 30, 2025 would be US$70.5. This is because, having paid capital coupons, the residual value of the bond is lower, which in turn reduces the price.
With this scenario, the MEP indifference price between a Lecap and the AL30 would be at ARS$1,294, figure obtained by dividing the value in pesos by the dollar value of the title. This would indicate a gap of 11.3% if the crawling peg remains at 2% through June, or 15.8% if the official crawling peg remains at 2% through February and then drops to 1%.
Breakeven points for the investor
These gaps represent the “breakeven” points for the investor in relation to the possible IRR of the AL30D (the AL30 in dollars), under the assumption of a “crawling peg” that continues at 2%. The report considers different IRRs for the AL30D, the break-even gaps for a Lecap investor would be the following:
- With an AL30D IRR of 12%, the breakeven gap would reach 17.7%.
- With an AL30D IRR of 11.2%, the breakeven gap would be 15.8%.
- With an AL30D IRR of 10%, the breakeven gap would be 13%.
- With an AL30D IRR of 9%, the breakeven gap would be 10.6%.
- With an AL30D IRR of 8%, the gap that would leave the investor indifferent would be 8.3%.
This analysis shows how the gap varies depending on the IRR, which influences the investor’s decision when comparing AL30D bonds with Lecaps.
Source: Ambito
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