The growing doubts regarding the future of the local economy, despite the fulfillment of the first goals committed to with the International Monetary Fund (IMF), they give no respite to a massive selling current of assets that shot up country risk to all-time highs.
In that framework, the bonds denominated in dollars lost up to more than 3%, with casualties led by Global 2029 (-3.2%); and the Bonar 2038 (-2.6%). In the week, the Globals accumulated a drop of 8.5%, uniform throughout the curve, thus closing at historical lows.
The Argentine country risk prepared by the JP.Morgan bank fell by a slight 0.1% to 2,043 basis points, although during the round it reached 2,068 units, a record since September 2020 when the index restarted at a level of 1,083 points following the millionaire swap of private external debt. Throughout the week, it registered a jump of almost 8%.
For its part, Inflation-adjusted titles closed with the majority of increases, following the collapses recorded between Wednesday and Thursday. In some cases, they bounced up to more than 5% (Discount, and Boncer 2023 -TX23).
“It is impossible that there is a single factor that explains the rise in country risk and the collapse of bonds. Argentina, following the restructuring of its debt, lost the ability to finance itself in dollars abroad and was left as the only genuine source borrow in pesos in the local market”stated Javier Timerman, partner of Adcap Grupo Financiero.
“As there are expectations of inflation and devaluation, the market began to buy debt and finance the Government in bonds that are tied mainly to inflation, and to a lesser extent, in bonds tied to the dollar (…) Now the questions of the market regarding a possible devaluation or a reprofiling and these causes explain the market”, he added.
Given the strong downward trend in bonds during the last few rounds, government entities such as Anses and the BCRA went out to buy securities to try to put a floor on the market.
All in all, the CER papers that expire this year accumulated the week with losses of up to 4%, bonds to 2023 retreated up to 9%, while long titles collapsed up to 17%.
The flip side of bond erosion was that redemptions of funds that invest in indexed alternatives (CER and T+1) accelerated. Between Wednesday 8/6 and Thursday 9/6, $43.5 billion came out of the FCI CER, while the drain on T+1 exceeded $30.3 billion. In the 7 rounds of June, $59.9 billion left the indexed FCIs and $19.0 billion left the 24-hour redemption funds, according to market sources.
The market is considering several hypotheses behind the sell-off of the debt in pesos: seasonal funding needs by companies, the anticipation of fears of reprofiling (encouraged by JxC) and movements of official entities, among others.
“In any case, the events crudely showed how vulnerable the peso curve is and the limited options that remain for the Government to comply with the Financial Program“, they analyzed from GMA Capital.
The dollar-linked sovereign debt did not do well either, which lost 2% on average at the wheel, with TV23 standing out, which fell 3.5%. In a tough week, DL bonds fell 5% on average.
To make matters worse, foreign currencies and stock markets closed with heavy losses following US inflation exceeded estimates, generating expectations of aggressive interest rate hikes in the world’s largest economy.
Retail inflation for May showed an increase of 1% versus 0.7% expected, and 0.3% from the previous month. For your part. core inflation came in at 0.6%, maintaining the pace of April. It was enough for the bears to return to the scene and make the S&P500 skid 2.9%, to accumulate a drop of 5.1% in the week.
For its part, the 10-year bond rate climbed 11 points to 3.16% (+22 bp weekly), while WTI oil fell 0.7% to US$120.65, gaining 1.5% in the week .
“In the United States, inflation skyrocketed and real interest rates are negative (…) In Argentina, inflation-linked bonds trade at inflation, so what there is in the country is a crisis of confidence regarding what What can happen with these bonuses?explained a financial analyst.
In the midst of the tension that reigned this week in the peso debt market, the Ministry of Economy will hold a tender for different Treasury bonds next Tuesday to be financed in the local market.
S&P Merval y ADRs
Product of another strong rise in the CCL dollar, the leading stock benchmark S&P Merval of BYMA of the Buenos Aires stock market managed to reverse its progress for much of the day and was positive by 0.3%, at 89,141.39 units, to lose 2.9% in the week. This market gains around 5.5% during the year, once morest inflation estimated by analysts at 30% in the same period.
In the Buenos Aires square, the rises of the leading shares were led by TElecom Argentina (3.51%); Transener (2.59%); Galicia Financial Group (2.53%); BBVA Argentina (2.17%); and Transportadora de Gas del Norte (1.55%).
Losses were noted by Central Port (-1.93%); Ternium (-1.50%); Pampa Energia (-0.97%); Aluar (-0.55%); and Edenor (-0.34%).
In New York, the papers of Argentine companies ended the session with the majority of results in red, among which stood out Free Market (-7.6%); Edenor (-7.3%); Irsa (-4.9%); Pampa Energia (-4.9%); and Transportadora Gas del Sur (-4.5%).
Separately, Moody’s Argentina said it assigned Vista Energy Argentina a long-term local currency issuer rating of “AAA.ar” and a foreign currency rating of “AA+.ar.”
