After seven and a half years, Argentina’s country risk pierced the floor of 500 basis points, a figure that, if maintained at this slope, will allow the Government to return to international credit markets in the short term.
The daily purchase of dollars by the Central Bank meant in January a preponderant motive for the rise in the prices of sovereign bonds, which was complemented by the conviction expressed by libertarian president, Javier Milei, to defend the balance of public accounts, both positive factors for fixed income.
While%20that%20at%20close%20of%20the%20Local%20Bolsa%20the%20bonds%20sovereign%20Argentines%20(Bonaresand%20Globales)%20rose%20of%20priceor%20a%200,9%%20in%20average,%20the%20risk%20pa%C3%ADs%20of%20Argentinarest%C3%B3%2017%20units,%20in%20the%20494%20points%20b%C3%A1sics.
The JP Morgan benchmark hit a low of 494 basis points, its lowest level since June 11, 2018 (487 basis points).
Analysts observed that this dynamic would enable in the coming weeks a projection towards 410 basis points for Ecuador, which has just carried out a double issue of sovereign bonds for a total amount of 4,000 million dollars.
The%20operaci%C3%B3n%20del%20pa%C3%ADs%20latinoamericano%20se%20structur%C3%B3%20en%20dos%20tramos:%20the%20firstcorrespondi%C3%B3%20to%20USD%202,200%20million%20with%20maturity%20in%202034,%20while%20the second%20 rose%C3%B3%20to%20USD%201,800%20million%20with%20maturity%20in%202039.%20Both instruments%20presented%20an%20average%20yield%20of%208,975%%20annual.
The Argentine country risk is now below that of Bolivia (548 basic points) and above that of Ecuador (409 points).However, it continues to be far from the figures of other countries in the region, such as Brazil (190 points), Peru (127 points), Paraguay (110), Chile (88) and Uruguay (69).
Eric Ritondale, chief economist at Puente, explained: “That the country risk is close to 500 points is relevant because it reflects an improvement in the perception of sovereign risk, associated with the stabilization process and the recomposition of reserves. More than a specific level, what is important is the signal that the market is beginning to validate a regime of lower volatility.”
“An additional compression of country risk would bring Argentina even closer to an instance of gradual access to the markets, in line with recent experiences in the region, such as the case of Ecuador. This access is key not only to refinance maturities, but also to consolidate stabilization, reduce dependence on internal sources of financing and facilitate a faster recovery of bank credit, which in turn helps to support growth,” added Ritondale.
“Although the rate of the 10-year United States bond is higher than that which prevailed in Argentina’s last international issue (2018), the fact that Ecuador has recently gone out to issue in the international market leads the market to wonder when it could be Argentina’s turn,” commented JuanManuel Franco, chief economist of the SBS Group.
Argentina’s return to voluntary markets is also reaffirmed by a “flurry” of issuance of corporate Negotiable Obligations placed abroad, for some USD 7,000 million since last October’s elections, along with a notable stabilization of the dollar and the contraction of private demand for foreign currency.
The Central Bank bought USD 32 million in the market, in the seventeenth operational session with a favorable balance in the market so far in January.The monetary authority accumulated purchases of 1,049 million dollars in January.Gross reserves, which exclude liabilities, amounted to USD 45,779 million, with a daily increase of USD 39 million.This volume represents the highest level recorded since the first half of September 2021.
“The destiny of the Government in the extraordinary sessions is an example of the governance that will exist in the future,” said Ignacio Morales, Chief Investments Officer of Wise Capital.”If Milei manages to approve at least part of his agenda, he will arrive on March 1 strengthened. If he fails, on the other hand, the ordinary period will begin with a politically disgruntled government and an opposition that is not only divided but emboldened,” he added.
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Also with a certain optimistic impulse due to the reduction of country risk and a slight bullish trend in the Nasdaq index of Wall Street, the S index
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“The Merval index is located in the area of 2,060 dollars, with oscillations between 1,900 and 2,100 points waiting for new catalysts. Banking sector stocks reflect demanding valuations in terms of ‘book value’, although they can benefit from a return of optimism,” said Rava Bursátil.
The dollar in the formal segment increased for the third consecutive operating day, thereby reducing the margin of decline that it has exhibited so far in January, the first month in which the official exchange bands adjusted for inflation are in force.
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The%20Bank%20Central%20fix%C3%B3%20for%20the%20date%20a%20ceiling%20for%20the%20r%C3%A9gimen%20of%20exchange bands%20of%20$1,559.78,%20that%20leaves%20al%20d%C3%B3lar%20wholesaler%20a%20117,28%20pesos%20or%20un%208.1%%20of that%20l%C3%ADmite%20that%20demarca%20la%20free%20flotaci%C3%B3n%20of%20the%20currency.
The%20d%C3%B3lar%20al%20p%C3%BAblico%20also%C3%A9n%20advanced%C3%B3%20cinco%20pesos%20o%200.3%%20a%20$1,465%20for%20la%20salessec%C3%BAn%20la%20reference%20del%20Banco%20Naci%C3%B3n.%20The%20BCRA%20inform%C3%B3%20that%20in%20the%20financial entities%20the%20d%C3%B3lar%20mretail%20average%C3%B3%20$1,463.48%20for%20the%20sale%20and%20$1,412.81%20forthe%20purchase.
The majority of future dollar contracts traded lower, although the most traded position, expiring at the end of the month (this Friday the 30th), traded slightly higher. According to data from A3 Mercados, the equivalent of 1,863 million was traded, a significant volume.
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Meanwhile, the blue dollar ended without variations at $1,490, after having traded at 1,500 pesos at noon.On Monday it had hit an intraday floor at 41,480, the lowest since December 15.The informal dollar remains down 40 pesos or 2.6 percent in January.
This Wednesday, the Treasury put out to tender very short-term debt in pesos to meet maturities for about $9.4 trillion, through four fixed-rate papers (Lecap), a Bill adjusted by the TAMAR rate, another four bonds adjustable for inflation until 2028 and a last bill linked to the dollar linked, with an eye on rollover and rate validation.
