Historically, yes We think about investing in dollars in Argentinaone can think of properties, in More stock for your company or even in Leave them under the mattress for institutional fear. However, there was always another option that becomes more relevant every year, the capital market.
If we think that In 2019 there were approximately 600,000 open cup accounts, And last year we overcome the 14 million, The growth was exponential in a short time, and we can expect this same trend to continue, especially if the labor market is regulated, reducing high informality in Argentina.
So, if the capital market is growing, what can we invest our dollars within the local capital market? In this analysis, we concentrate only on assets of Fixed income of foreign legislation, especially corporate bonds and sovereign bonds “Hard Dollar”.
The former are an ideal instrument for those who take their first steps in the capital market and look for a moderate risk asset for their savings, and with less price volatility. The great advantage of fixed income is precisely the last word. The performance is set from the moment one buys and knows exactly how much it will receive and when.
In what to invest the dollars: opportunities in negotiable obligations
Within this curve, we can find First -line companies such as YPF, Pampa Energía, Telecom and Vista Energy quoting “Yields” between 7 and 8.5%.
Within the curve, we pond more sectors such as energy through YPF – YMCXO 2031 (8%), Pampa Energía – Mgcoo 2034 (775%); Energy view – vsct 2035 (8%). We can also add an option from the telecommunications sector with TELECOM – TLCMO 2031 (8%).
In this instance the question always arises, what happens if I want to leave before? Do I have to wait until the expiration? The answer is that if one wants to maximize your investment, the ideal is to stay until the expiration. However, if the investor wishes to leave before, he can do it, this is not like a property.
These instruments They have a lot of liquidity in the market and the investor can have the dollars available within 24 hours.
What to invest the dollars: opportunities in sovereign bonds
Going to the sovereign curve, we notice some differences with the corporate mentioned above. These present performance measures or “Yields” higher, and this is because they are debt titles issued by the public sector. In other words, your debtor is not a company like Pampa Energía or IRSA, but the Argentine State.
In the Argentine sovereign curve foreign law, or as they are normally known “Global” we find “Yields” between 10% and 11.5%. That is, a higher performance than corporate ones, and this is because the public sector is perceived as a more risky debtor than the private sector, and as we well know “A greater return, it entails taking a greater risk.”
The fact that the bonds issued by the State yield more than the bonds issued by the companies operating in that same country is one of the great peculiarities that stand out in the Argentine public debt market, unlike other countries in the region and the world.
Within this curve, we pondered the long section through the Global 35 – GD35 and the Global 41 – GD41. The reason is that at the time of writing this column, there is a strong “strong” driver for Argentina after the signing of the new agreement with the IMF and the departure of the stocks: The possible requalification from Argentina to emerging, and finally leave the “Stand Alone” category.
Now, let’s stop at this last point and think the following. What if the country risk continues to compress? What if Argentina is recategorized as an emerging country? What if Argentina begins to look more like a “normal” country?
In that case we could expect that as the low country risk, the performance of sovereign bonds (rising price) should also lower. Today Country risk is 700 points, while other regionally closer countries such as Chile, Colombia and Brazil operate between 200 and 500 points.
The latter tells us that there is still space to continue compressing country risk, which has a positive impact on Argentine assets in general. So let’s go back to the comment that Perhaps we are the only country in the world where its corporate debt quotes to lower yields than sovereign debt.
This means that in a scenario of “normalization” and of country risk contraction, this relationship should turn, either due to an increase in corporate performance (lowers the prices of these instruments) and/or a low performance in sovereigns (the prices of these instruments rise). In the current scenario, I see the second stronger.
Guardian Capital
Source: Ambito
David William is a talented author who has made a name for himself in the world of writing. He is a professional author who writes on a wide range of topics, from general interest to opinion news. David is currently working as a writer at 24 hours worlds where he brings his unique perspective and in-depth research to his articles, making them both informative and engaging.
