This Thursday, Argentina faced the payment of some $4.36 billion for rent and amortization of two of its main public securities, in the face of investors who are recalibrating strategies given the favorable expectations of the economy and which are driving domestic assets to all-time high prices.
After a debt restructuring carried out by the previous Government, the administration of libertarian Javier Milei settled through the Treasury maturities of capital and interest on the ‘Globales’ bonds, issued under foreign law, and the ‘Bonares’, under the protection of the law. Argentina.
“They say that what was promised is a debt… in this case, paid!” exclaimed the Secretary of Finance, Pablo Quirno, on his X social network account.
Market analysts said that the measure has a full impact on the reserves of the central bank (BCRA), which is already discounted by the market, and that a good part of the liquidity can be reinvested in sovereign debt due to high yields and an attractive risk. country 11EMJ below 600 basis points, its lowest since 2018.
“In terms of sovereign bonds in dollars, as the January coupons and amortizations are now paid, we consider that part of that flow could be reinvested in the same bonds, deepening the compression of country risk,” said Juan Manuel Franco, chief economist of the SBS Group. .
Argentine bonds returned an average of 56.7% in 2024 alone, standing out among global investments.
With the accounting cancellation of the coupons, the over-the-counter debt gained an average of 0.3% on the day tied to a country risk with a decrease of five units to 564 basis points (1425 GMT), while the S&P Merval stock index .MERV rose 1.25% to the tune of financial and energy papers.
The BCRA reserves fell on Wednesday by 1,728 million dollars to 31,176 million according to an official provisional figure, so this Thursday they should experience another similar decline due to the commitment to cancel the debt.
The Moody’s agency raised the rating ceiling for Argentine debt in local and foreign currency as a reflection of greater predictability and consistency in economic policy.
“The maintenance of the fiscal anchor, the inflow of dollars associated with (money) laundering and the prioritization of the payment of (debt) maturities as a destination for accumulated reserves” support the outstanding performance of the firm parities of Argentine bonds, highlighted a private consulting firm.
With the assumption of Milei in December 2023 and the implementation of a harsh orthodox policy focused on fiscal control and the reduction of inflation, the financial market of the third largest economy in Latin America scores highs in a renewed way due to fresh capital in dance.
Poverty and indigence present themselves as tough short-term challenges.
“The average ‘spread’ by legislation in sovereign bonds is below 1% (…) Although we do not identify default risks in the short term, we prefer to remain positioned in bonds under foreign law, given their better performance profile. risk and a potential expansion in these ‘ratios’,” reported the consulting firm Delphos Investment.
In the midst of current exchange restrictions (stock exchange restrictions), the BCRA signed a loan (REPO) for 1,000 million dollars with five international banks to reinforce its reserves.
“The long-awaited ‘REPO’ was well received by investors, who interpreted the return (of Argentina) to the capital markets as a positive sign (…) With the country risk below 600 basis points, the ‘REPO’ ‘indicates that Milei’s administration is close to recovering access to the market,’ said consulting firm Max Capital.
With the direct intervention of the BCRA, the wholesale peso devalued very slightly to 1,037 per dollar ARS=RASL, and in other alternative bands the currency fluctuated calmly at 1,193.6 units in the “CCL” ARSCONT2=, to 1,169.4 in the dollar “MEP” ARSMEP= and 1,220 units for the marginal ARSB=.
Argentina is negotiating the renewal of a loan for 44 billion dollars with the International Monetary Fund (IMF), an organization that would analyze the request this month. The original signing of the agreement dates back to 2018 for $55 billion.
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