The recovery of the Argentine assets remained firm so far this week, between a more favorable international climate and new support of both the IMF and the American Treasury. As a result, the bond contributions are recovering the land lost at the start of the year, returning to USD 70 levels.
Yesterday there were new statements in favor of the economic plan on the part of Scott Betting. On Tuesday he had confirmed that the United States would be able to offer Argentina a financing line in case of crisis. But the Treasury secretary redoubled the commitment to praise the plan that has been carrying out the government, considering that the help of the IMF in these circumstances was “deserved.”
Strengthening reserves after USD 13,500 million disbursed between The IMF and the World Bank They helped calm investors. He also helped clear the doubts regarding Argentina’s ability to pay in relation to future debt commitments. Therefore, the bonds had significant increases, although there is still enough way to go.
Yesterday the longest bonds rose, which are the ones that pay the highest interest coupons: the 2035, 2038 y 2041. In the scenario of an additional country’s risk fall, which is seen as very feasible for the coming months, they are the titles that have the most possibilities of appreciation. They still have yields above 10%, a rarity in the fixed income market globally.
The JP Morgan delays to update the country risk measurement prevented in recent days having a clear notion regarding the decrease in recent days. Last week he had closed around 720 points, but now it should be comfortably located below 650 points.
This improvement in debt price is not just good news for Argentine bond holders. It is also a key fact for the Government, which requires prices consolidation to improve its financing possibilities.
The next objective is to be financed through operations of “Repo” with international banks. They consist of receiving a Credit in dollars of medium term to strengthen reserves. But for this you have to deliver guarantee titles. The higher the price is, the che ast the cost of borrowing.
The Government has already closed an operation for USD 1,000 million at the beginning of the year and now the idea is to carry out other similar agreements for USD 2,000 million, according to the minister Luis Caputo by presenting the end of the headache for the public.
But according to the agreement signed with the IMF, the objective would be to recover full access to financial markets at the latest at the beginning of the year. This would allow Argentina to refinance the Bond maturities No need to pay all the time with your own reservations, something that in the long term is impossible.
At that time the uncertainty of the legislative elections and the promise of the government will have passed is to move towards a full flotation of the exchange rate, abandoning the current band scheme. These two milestones should give the final impulse for the government to recover international financing.
Meanwhile, the look of investors remains attentive to the evolution of the dollar, which now moves with greater freedom. Yesterday there was a clear rebound of almost 5% in all contributions, which was something unexpected. With the good offer of agriculture, it was clear that at the same time the demand for importers and the public jumped. Both the official dollar As the financial ones were between $ 1,170 and $ 1,190, while the free was the only one that exceeded $ 1,200.
