In addition to the recovery, dollar bonds accumulated a drop of almost 16% in February, although the local factors involved in this collapse are well known, there are also external factors that prevent the achievement of the government's goal of reduce sovereign risk.
He Wednesday (02/22), local stock markets broke the downward trend of dollar-denominated securities, uploading more than 5%, while exposure to the country of Argentina fell 4.3% to 2,086 basis points.
Among the biggest forwards of the day were found Bonar 2038 (+5.2%). Bonar 2035 (+4.7%); and Bonar 2041 (+4.7 1Q3Q).
Operators and analysts agree that the fall in subbond parity in recent weeks could make it difficult to start a possible “repo” inter-institutional to complement the limited reserves of the central bank (BCRA).
The government announced a buyback of subbonds worth around $ 1 billion to raise profile of the goddess, and a source close to the agreement said that the Ministry of Economy had recently received seven offers for a loan “Repo” of around $ $ 1 billion.
Besides the recovery this Wednesday, subtitles in dollars accumulate a drop of almost 16% in February. Although the factors Locals involved in this collapse are well known, there are also external factors that prevent the government goal of reducing sovereign risk. In this note, all the reasons.
Local factors
According to him latest PPI report, although the poor performance of the subtitles in February is well known, attributed the cause to the decision ofl Central Bank to reduce the aggressiveness of its subtitle purchase program, which caused the Short-term subtitles perform better than long-term ones.
“We believe this trend will continue this week, as the GD41 is the gift we consider the most interesting at the moment. The next event will be the darling auction scheduled for the 24th, the conditions of which we hope to know even in the morning round.”
Among other reasons, there is also the fear of investor default, the upcoming elections and the government's political uncertainty are also generating instability in subtitles and the dollar.
“This year, the direction of Argentine investments will be marked by the electoral results and the firmness of the next measures,” said Juan Alra, portfolio manager of Southern Trust Group TPCG in dialogue with Ámbito.
External factors
One of the factors that affect the prices of bonds is the Fed's rate hike. For investors, the inflation appears to have lasted longer than the market expected, and now they expect the Federal Reserve to stay tighter for longer.
“With such attractive rates in the US, emerging markets were hit hard and Argentina's performance was no exception, as evidenced by our trend-adjusted and beta-adjusted Argentine emerging market price series,” it reads. in the latest PPI report.
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As interest rates rise, the capital flows from risky countries to less risky countries.
To see these trends, we often look at the emerging markets subbond index, an ETF that tracks a dollar sovereign debt index of emerging markets that has fallen 4% monthly.
Emerging countries will depend largely on the aggressiveness of the Fed. A firmer policy will likely lead to further declines in closed captioning.